Provident Living


By Henry K. (Bud) Hebeler


Saving and spending are two sides of the same coin. One canít go up or down without the other doing just the opposite. This is an immutable financial law. With regard to retirement, you save when you are working and spend when you are retired. If you havenít saved any money for retirement, you will live only on whatever you get from the government or a paternal employer who offers a pension plan. For almost everyone, that means less income, often lots less, than while working. The problem will get worse because national savings statistics show that for the last decade, people have been saving only about 4% of their disposable income. Thatís far short of the 10% historical average.

You are encouraged to spend, not save, in virtually everything you hear, read, or see in the media. Industry advertises itís products, magazines tout the benefits, and the government wants you to spend so that industry can produce more and therefore employ more people. Your neighbors and peers are spending, often far above their income. This means they are buying on credit. Most have credit card debt, the worst kind of debt you can possible have. The average household now has over $8,000 in credit card debt, a record high. Industry has record debt, mortgages are at record highs, the government has record debt and the international trade deficit is a record. This does not bode well for those who are not prepared for the inevitable long-term increase in interest rates and taxes.

If you are relying on social security, remember that it was designed to replace only about 40% of your working income, at best. Medicare Part B insurance costs come right out of social security paychecks, and those costs are rising at an alarming rate as medical costs increase and the population ages. When increasing Medicare deductions come from social security checks, the net amount you get falls behind the cost of living adjustments everyone assumes. This exacerbates the fact that as people age they need more medical, dental, hearing, and eye careómuch of which is not insured. And such costs are increasing much faster than social security adjustments.

Demographers estimate that there will be only 2 workers per person over 65 in 2040 instead of the 3.3 workers now. That may tilt the Medicare taxes even more towards social security reductions as will the ability of the working population to support the basic payments. Future retirees are going to need even more extra income to supplement social security.

So, if you are not already on a budget that includes saving for specific things you know are in your future, get with it! Sure, if you are unemployed, you are not going to be able to save, but you should do everything you can to avoid tapping what youíve already saved for retirement, particularly if you are using the money to sustain the same life style as when you were working. Retirement is the longest period of unemployment most people ever have, and it takes resources. Lots of resources!

If you havenít done any retirement planning, get with it! There is a free download of a program on the Web that will help you save both for retirement and other things before retirementóperhaps your childrenís college expenses or some reserves for emergencies. See the free Simplified Financial Planner on Then decide whether you really need multiple cell phones, high-speed internet access, dish TV, new music CDs every month, cars for your kids, etc. Twenty or thirty years of retirement desperately seeking financial support while living in faceless, state-supported housing with no amenities, no travel potential, severely limited recreation, no meals out, no health insurance, no way to financially assist adult children or elderly parents in trouble, etc. may otherwise be your fate and far different than the image you now have for retirement.

Think about it. Then do something about it!