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A article in the NYTs says “Many people are not aware IRAs exist.” Can that be true? I bet it is.
One survey reports the median worker has only $955 saved for retirement. Another says 1 in 5 Americans over 50 has no retirement savings.Some people push for a national IRA with auto enrollment because people don’t have access at work.
I find that curious because as you know there are individual IRAs, ROTH IRAs, SEP IRAs (Simplified Employee Pension), Solo 401(k) and a Simple IRA. Of course there is the good old brokerage account and annuities too.
The TIAA Institute-GFLEC Personal Finance Index (P-Fin Index) highlights that financial literacy in the U.S. has hit a decade-low. U.S. adults correctly answered an average of just 47% of the basic personal finance questions on the index.
Some observers take this point of view. “The problem isn’t that Americans don’t care—in fact, surveys show a strong desire to learn—but rather that the financial landscape has grown increasingly complex while formal education has struggled to keep pace.”
Do you agree with that? Did you learn what you know about financial matters through formal education, or did you exercise initiative and educate yourself? Needless to say, all we need to know is readily available with reasonable effort and awareness. These days you don’t even have to do individual searches, you can have an AI tool do the initial work.
My 50 years of trying to educate workers about retirement, 401k, social security and health care coverage tells me it’s not lack of formal education (although I support that), it is absolutely a lack of caring about such issues, a lack of trying to be aware and an inability to focus on longer term issues and goals.
When was the last time you ignored something you truly cared about?
I remember that in @ 1983-84, I was giving a presentation to a group of new employees about the benefits of participating in the company 401 (k) plan. The level of ignorance was almost as bad as the level of interest. Apparently, getting free money with a 100% guaranteed return was too hard for some people to grasp.
Since that time, I have never been surprised by the financial illiteracy of my fellow Americans. I also suspect that the ignorance is not accidental. After all, 99% of graduating high school students fail the simplest personal finance quiz… and 65%-75% of adults over 50 do not do much better. It’s almost like our government and financial institutions prefer an ignorant, financially illiterate population.
My stepfather discovered mutual funds in the late 1950s. He retired in 1985, after 24 years in the US Army and 16 years as a Capital Police officer. He began investing in his late 20s. Over 40 years, he amassed $1.3 M and had a paid-for home and car. And he did it without a 401 (k) or Roth Account.
I retired in 2024 with $1.3M, a paid-for home, and 2 cars. As I shared in a recent post, over my lifetime, I earned @$4,233,495. 59.95% of that money was earned in the last 15 years of my 58-year working career. During those 15 years, I earned my highest annual income and maxed out my 403 (b) and Roth IRA.
It’s never too late to start, but the earlier the better!
I learned how NOT to invest from my parents. I have absolutely no formal education, never took any kind of financial classes, but I’m a do it yourselfer when it comes to most things, including investing. I purposely keep it simple and boring. I was a Teamster, blue collar guy, but we managed to raise 3 kids, 2 with Master’s degrees with little college debt and accumulate a 7 figure portfolio thru years of modest saving and investing, index funds only thru Vanguard. If I can do it, anyone can.
Mike, I love to read about success stories like yours. The readers that have been on HD for a while know that I drove a beer truck for 30 years. Like you, I got to where I wanted to be financially.
I didn’t graduate from college, but I did make it through high school. By the clear and articulate way that you express yourself, I’d never guess that you didn’t receive any formal education.
As Henry Ford is credited with saying. If you think you can or think you can’t, you’re right. You found out you could and you did.
You’re right, virtually anyone can. I started with a high school education and a near minimum wage union job and very gradually got to where I wanted to be, including paying for 16 years of college for four children and earning a degree over nine years at night.
It is not education that matters it’s determination and setting priorities and sticking with both – and likely delaying some things you may want.
Of course, the absence of serious misfortune helps as well.
Did Henry Ford’s words apply to all people or only to people of certain backgrounds?
In this man’s opinion, it applies to all people… albeit it can certainly manifest in different ways.
One thing is for sure: those who do not try, do not succeed.
I was 8 y/o in the 1950s when my father was taking his MBA at Syracuse U. I was asking him numerous things financial, one of which was, “How do you get rich?” His answer, “Two ways, real estate and/or stock market investing.” Never forgot the latter.
My parents continually modeled financial discipline and deliberation, so adopting their behaviors came easily. But I didn’t start thinking seriously about investments until my 30s. Then, the most useful resources were the print magazines I received each quarter from TIAA. They helped me to see investing as a journey, and to envision a future self. Easier, I think, to read and reflect on a printed page than to click on a soon forgotten article, HumbleDollar excepted.
All you need to know about investing is index investing. Read first A RANDOM WALK DOWN WALL STREET TO LEARN why its the superior way to invest and then another book by bogle on funds or Wm Bernstein’s book The 4 Pillars of Investing. That’s all you need to know to invest better than the rest that are financially illiterate
I’m about 65 YOA, have an MBA, and yet, until about 2 or so years ago, did not