We spent our summers driving terrific young men all over the southeast. I wish I had taken a photo of 15 teen-age boys sleeping in my motorhome as I drove home late on Sunday nights.
Gary and I are in our 70’s and feel blessed to still be in contact with many of them. My son’s group is now in there 50’s.
I’m delighted to introduce one of those men, E.J. Harof. EJ has raised a family and done well. He is at the time of life I call “racing to the finish line!” The economic and emotional pressures come from all directions – aging parents, getting children through college and funding their own retirement.
In 2008 EJ formed a consulting business (EJS Partner Network) working with Microsoft partners around the globe. He’s a world traveler and educator.
I asked EJ to discuss the generational differences that have come about over the last 30+ years.
DENNIS: EJ, on behalf of our readers, thanks for taking the time to share your thoughts. Let’s get right to it. In my early 50’s my wife and I had an unforgettable “day of reckoning”. That was when we ran the retirement numbers. It wasn’t pretty!
We had to get serious about saving if we wanted to retire comfortably. Are you seeing your generation beginning to get serious about saving for retirement?
EJ: Thank you for inviting me. I had not looked at what my friends and family were doing in regards to savings until you asked. Since we started talking I found out some trends from employees and employers. Both bad.
The employees that have access to 401Ks are not using them as well as they could. Only 20-40% is what I was told by multiple contacts. Many companies administer plans with some company matching after a year on the job. I would encourage anyone who has these programs available to make full use of it. What’s not to like about a 100% return on your money the first year?
I have my own consulting company. There are also tax deferred plans available for those who are self-employed. Unfortunately there is no large company-matching program, we have to save it all and invest wisely.
One generational difference I see is many small companies can’t afford to offer employee healthcare or any kind of matching retirement funds. As a result, a lot of my generation became contract employees. At the end of the year they receive a 1099 instead of a W-2. We are responsible for all of our social security, Medicare, retirement savings and health care.
Many large companies I work with made drastic cuts to stay in business. They cite all the current political buzzwords; regulation, health care costs, you name it.
One example is employee training. In the past, companies would recruit and train a high potential new employee for as long as 1-2 years. Now its throw them in – sink or swim on the job. Why is that? Training provides long-term benefits and is considered a luxury. They can no longer afford to have less than full productive employees on the payroll for a couple years.
Everyone agreed the right strategy is to max out the 401k every year before you look at investing in other plans. So are people getting serious? Unfortunately I don’t think so.
One relative pointed out to me after they pay all their bills there is no money left for savings. If he does not want to work forever, he will eventually have to adjust his lifestyle, live below his means and get serious about saving. It’s a tough challenge for many.
I was in the apparel-manufacturing world in the 90’s. I recall the debate when Ross Perot talked about the “giant sucking sound”, stating if NAFTA is passed manufacturing will leave overnight. He was right; our industry flew south almost immediately. It forced me to move to a different tech industry. High costs and competitive markets seemed to fuel the rise of contract employees, who are really self-employed workers with no benefits.
DENNIS: What are the financial planners telling you as far as conservative, realistic projections for savings growth?
EJ: A lot of my age group work with planners, whether they are saving themselves or have a 401 (k). We are much too busy generating revenue to take on a new career, a do it yourself investor.
Where to invest seems to be the philosophy of the financial planner. Some are using Fixed-Income Securities because they don’t want to lose money; however they lose income potential when the market is good. In a good year they can still make 5%.
We were taught the rule of 72. We shoot for that and I use Mint to help. We diversify using Vanguard Mutual Funds, some averaging as high as a 22% return. I do not have time to study markets daily nor do I want to. Fortunately I work with a financial planner I trust.
DENNIS: I recently revised my report, “An Honest Person’s Guide to Social Security”. Social Security will exist when your generation retires; however it is likely to be means tested and have little, if any cost of living adjustments. When planning for retirement, how is your generation factoring social security into the picture?
EJ: It’s a bonus. Don’t count on it. With almost 50 % of the US not contributing how could it be substantial? You mentioned means tested. My biggest fear is not only providing for my retirement, but also for those who made bad choices and did not save.
I’m very fortunate. I’m sure you remember by dad. He was an excellent businessman and is a terrific mentor. Many of my friends are not so lucky to have a mentor constantly encouraging them to look down the road and see the big picture.
DENNIS: EJ, that is one reason I asked if you would agree to an interview. If your generation hears from one of their own, and you can motivate some to get serious, it is worth the time and effort.
Many in my generation made financial mistakes, or were divorced and started over financially. We had the benefit of time and a better economy to recover. What do you see happening in your peer group?
EJ: Bad stuff happens to all generations. One of the lessons you learn in sports is everyone messes up. It’s what you do afterward; picking yourself up and going forward that really matters.
One lesson transcends generations. To accumulate wealth you must live below your means, save and grow the remainder. Compounding still works today.
Dennis, a couple of weeks ago I went to our old ballpark and something hit me. While it seems like yesterday, it’s been 35 years since we played on the Mustangs. In less than half that time I will be 70 years old. We better get serious about saving for retirement or we will be working until we drop. It’s never too late to start saving.
DENNIS: EJ, it appears to me your generation is much more aware of these issues than we were in our 50’s. If I were to summarize your thoughts in bullet points, it might look like this.
- Many in your generation get it and are aware of the challenges. Some, as you said in our phone conversation, live in a bubble of kumbaya.
- Some know what they should be doing however are not being honest with themselves. You mentioned you might have 200 people that say they invest portions of their paycheck even though they really aren’t.
- Boomers should maximize their savings, particularly 401(k) or other retirement programs. If they work with a company that offers a 401(k) max it out then look to other investment opportunities.
- Don’t get fooled by social security promises. Anything from the government should be considered a bonus.
- It’s never to late to get the train back on the track. You are in the 5th inning of life and there is a lot of time left.
EJ: Great summary. I would like to add one thing. I am very concerned about the generation that follows. Many don’t seem to have a clue about finance, life or our country.
I have a very close relative who watched the election with approximately 200 people. They discovered 80% of them did not vote and 94% percent of them didn’t know how the Electoral College worked. All were juniors and seniors on a major college campus.
No one knows what the next generation will bring – some have very different core values. It reinforced my belief that we are responsible for our own behavior, including our retirement. No one is going to do it for us.
DENNIS: Well said EJ. On behalf of our readers, thank you for your time.
EJ: My pleasure Dennis.
Dennis again. Some things don’t change. Many work hard, play by the rules and hope to provide for their retirement. Others live from day to day not worrying about tomorrow. For most, being able to retire comfortably is still old-fashioned rules – live below your means – accumulate wealth and make good choices.
On the Lighter Side
My friend and subscriber William Teh sent along his new book, “From Scarcity to Abundance”. He left the corporate world and followed his dreams. William is in his 50’s, balancing work, family and the future. He has the uncanny ability to take complex issues in life and distill them down in understandable terms. His lessons are excellent, timely and actionable. It’s a great book and I highly recommend it.
As always, please go through this link as Amazon pays us a small stipend which helps offset some of our cost.
Speaking of which, Thank You to all who used our link for your Christmas shopping. Last year our Amazon income covered one full month of our operating cost. Hey, every little bit helps! Jo and I appreciate it.
Congratulations to the New England Patriots on winning a very exciting Super Bowl. EJ’s comments about being down and picking yourself up are timely.
For those who missed the Clydesdales this year, Jo sent along a great video.
Friend Bob D. shares some clever tidbits:
- Money isn’t everything, but it sure keeps the kids in touch.
- If at first you don’t succeed, skydiving is not for you.
- Artificial intelligence is no match for natural stupidity.
- 92.765% of statistics are made up.
And my favorite:
- The reason politicians try so hard to get re-elected is they would hate to have to make a living under the laws they’ve passed.
Until next time…
This article was originally published on Dennis Miller’s free website Miller On The Money. Join today and receive his articles – Straight to your inbox for FREE! PLUS, when you join, you will receive Dennis’ Special Report – An Honest Persons Guide to Social Security – Absolutely FREE!