Last time we looked at three economic problems that loom large on our nation’s horizon: debt, demographics, and decisions.
- Debt. Our debt problem is no secret. Americans—collectively and, in many cases, individually—have been on a “spend-more-than-we-take-in” spree for years now.
Lured by the economic steroid of borrowed money, we’ve accumulated debt as if we’d never have to re-pay the proverbial piper (i.e., the bank).
- Demographics. Our demographic challenge is a major shift from a time when huge numbers of younger workers supported a few older retirees…to today when fewer younger workers are supporting huge numbers of retiring baby boomers…many of whom are living longer. This disparity shows up in Social Security, Medicare and healthcare costs, all of which are projected to swamp us.
- Decisions. Our “decision dilemma” is both political and personal.
Politically, Social Security is known as the “third rail” of politics. The rule among elected officials is “if you touch it, you die.” So, most look the other way while the country sinks deeper and deeper into debt.
Here’s the grim truth: If those in charge won’t act, the markets eventually will. When the world financial markets become convinced that America has let her debt and demographic problems slide too long, they will demand from our treasury much higher interest rates for the use of their money—the very thing our debt-strangled nation does not need.
In an effort to curb inflation, the Federal Reserve has already raised interest rates from their historical lows of near 0% just two years ago to 5.25-5.50% in August of 2023. That’s a lot of money our federal government is now having to pay, simply in interest payments.
So…what if our leaders lack the courage to deal decisively with our debt and demographic crisis? Does that mean there’s nothing you can do? No way!
Here are four steps you can take to prepare for whatever may come:
- Get a plan. If you think just keeping your head above water month to month is adequate, think again. You need a clear picture of where you stand…and what it will take to get you to a place of financial freedom. Hiding from the problem won’t make it go away. Face reality now by working with a financial planner to create a clear, smart financial plan. (And it needs to be a plan that will take care of you if your employer, your bank, and even your government decides to stop taking care of you!)
- Get free. Debt has most Americans in bondage. If you want to be truly free, you need to make debt rare and optional.
The path to that kind of freedom can only be paved with radical thrift. You’ll need to pay down debt and save money like no one else you know. Otherwise, you’ll remain as trapped and susceptible as your coworkers and neighbors.
- Get control. You wouldn’t let just anyone drive your car. So, why would you entrust your money to nameless, faceless people you’ve never met, hoping they’ll manage it carefully? I’m not saying, “Never do business with someone outside of your zip code.” I am saying, “Take responsibility for your financial health.”
If all your savings are in a government-sponsored savings plan that you can only access by paying a penalty…or if you’re in debt to various financial institutions for cars, boats, houses, and long-ago vacations…are you really in control of your finances?
You are not.
- Get ahead. Once you have a smart plan, it’s a matter of following it to the place of financial freedom. You can’t just create it and stick in in a drawer! A big factor in your success will involve reviewing your plan and making mid-course corrections—ideally with the help of a trusted financial advisor.
As you do that, you’ll likely find you’re not only able to avoid the stressful money woes of those around you, you’re also able to take advantage of good financial opportunities.
The big takeaway? The challenges of debt, demographics, and decisions are real and growing.
Be one of the few who prepares for the worst by doing what’s wisest and best.
That’s the real American way.
Last thing…if you’re in your 50s or 60s and you have concerns about your retirement plan (or lack of a plan), email me at firstname.lastname@example.org.
I’ll send you my free list of 30+ questions every soon-to-be-retiree needs to be asking and answering. (You don’t want to spend the next decade fretting 24/7!)
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