If it is Too Short; it is Too Late
Recently, I travelled to France for a vacation. I spent some time in Avignon in Provence and then took the train to Beaune in Bourgogne, the home of the famous Côte-d’Or wine region better known as Burgundy. I was in great need of a haircut, so, after walking a couple of blocks from the train toward my hotel, I came upon a hair salon. To say my French is limited and almost non-existent is a great overstatement, but having spent a week somehow communicating my basic needs in Provence—ordering food, dealing with the trains, hotels, rental cars and taxi drivers—I was emboldened. I decided to go in and ask for a haircut.
When I entered the salon and made eye contact with the owner, who was in the process of cutting another man’s hair, I ripped out in an American southern accent, “Je suis désolé, je ne parle pas Français. Parlez vous Anglais?” Meaning “I’m sorry I don’t speak French, do you speak English?” Barely understanding me, she said back, “Un peu,” which means “a little.” I then asked in English, “Haircut?” She said, “15 minutes.”
I came back in 15 minutes and she sat me down in her chair without saying a word. She grabbed my shoulders firmly and let me know she was in charge. She washed my hair, then began to cut my hair without ever saying anything. No questions about how I wanted my hair cut, or anything else. It was clear to me that she saw herself as an artist and she would cut my hair the way she saw fit. Other than a razor to shave my neck, her only other tool was scissors. It was as if the female version of Edward Scissorhands had gotten ahold of me. I thought this might be the best haircut I’d ever had.
When she was suddenly finished, she put both hands up in the air (as I could see in the mirror) and exclaimed “VIOLA!” I began to tell her in English how great it looked, and she again demonstrated her limited English. She said, “If it is too short, it is too late.” To which we both had a roaring laugh.
When I returned, I shared that story with my friend and business coach, Donna Peters. Donna immediately said, “Isn’t that true in financial planning as well?” Of course, it is true. When we save for retirement, time is our greatest friend. To save consistently over the years but to also take advantage of what I have called in a previous post “the eighth wonder of the world: compound interest.” We have a crisis in our country affecting people over 55 with inadequate savings for retirement. According to The Center for Retirement Planning at Boston College, the following apples today:
• Since 1962 the average number of years in retirement for men has gone from 13 years to 21 years today. Years in retirement will increase over time.
• The average 62 year old person will have a disability within 3 years that will make it very difficult for them to work.
• Older workers have a hard time finding employment over 62.
• The retirement age for men has stayed since 1962 at age 65. For women, it has gone up from 53 to 65.
• Defined Benefit Plans which were the norm in 1962 have been replaced by defined contribution plans, 401Ks, 403b’s and other self-funded plans, meaning workers are responsible for saving for retirement.
• The average 401K balance for current workers aged 55-65 is $144,000. To make this money last 30 years in retirement, you can take $5,760 a year. Not a lot of annual income.
• The largest Social Security monthly payout at full retirement age is $3,148 if you meet the Social Security maximum payments each year for 35 years. The average payout is $1,543 per month.
SAVE EARLY AND OFTEN! The earlier you can save money for retirement the better. Consistency over the years is the key. I suggest saving 15-20% of your income each year if possible. Contact a Certified Financial Planner to put together a comprehensive financial plan and to assure your money is invested wisely.