A new survey from the Insured Retirement Institute (IRI) found that 55% of Baby Boomers had retirement savings today. In 2011, the study found that 75% of Boomers had retirement savings. Worse, among this current group, 50% have less than $250,000 in retirement accounts.
Depressing surveys about the how ill-prepared Americans are for retirement are the norm. I have been writing about retirement issues since the late-1970s and cannot recall one positive report or survey among the thousands conducted that ever said Americans approaching retirement had the needed money or were financially secure to actually stop working and maintain their pre-retirement standards of living once regular work paychecks stopped. It has never happened.
But the most depressing thing about this IRI report is that it found financial professionals who work with pre-retirement clients on a daily basis were not including the costs of medicine, hospitalization, drugs and physical rehabilitation in their financial estimates about the expenses of life in the post-working world.
According to the report (as reported in an April 8, 2019 issue of Plan Sponsor), “70% of those who work with a financial adviser have calculated a retirement savings goal. However, many of these advisers are failing to include health care and long-term care costs in these equations, as only 50% of those working with a financial adviser have included health care costs in their retirement savings goal, and only 36% have included long-term care in that equation.”
This is astounding.
It is gross professional malpractice for the 50% of advisors who forget to include health care costs of all types in retirement financial planning. It is also the main reason why the vast majority of Americans will never be financially secure after they stop working.
Financial Advisor Malpractice
Health care costs are rising and getting worse. These costs also cause health care-related bankruptcies. While a Washington Post report found that medical bankruptcies accounted for just 4% of all bankruptcies, it found that lost income from being ill added to personal household debt and a lower living standard. People who are hospitalized worked less when released, so their lost income, combined with a high debt load that most Americans have in a consumer society, was a larger cause of financial stress than the actual medical bills.
This means financial planners who omit medical and health care costs, including long-term insurance premiums, in their financial projections are guilty of gross professional malpractice.
So if you go to a financial advisor who does not ask about health care costs, student debt loads, the last time you got a raise, or if you are supporting other members of your family on your salary, do yourself a favor and fire that financial advisor.
Instead, find a registered investment advisor (RIA), or financial planner who follows the fiduciary standard, and knows the full dismal political and financial picture Americans face in the Trump era.
Only a financial professional who knows today’s political realities can deliver sound advice. If they are wimpy or evasive when discussing health-care-for-all, taxing the wealthiest Americans for their fair share, closing tax loopholes, addressing the huge wealth disparity in America or student loan debt, find a new advisor immediately.
Because the new political reality playing out on every computer and TV screen in the nation shows that unregulated capitalism is a failure for the average American.
Ask Your Financial Advisor About Neoliberalism
The policies of neoliberalism, the political ideology that the “free market” (that does not exist) will solve all social, economic and political problems, are a failure. This is the policy that has governed the U.S. since the Reagan administration and has been discussed on this site many times. It is the root political-economic policy problem responsible for many of the problems in the U.S today.
If your financial professional does not know what neoliberalism is, have him contact his PR or the legal department that controls the lobbying money. Wait in the room when he calls and listen to the conversation. If he cannot provide you with an answer while you are in the meeting, you are sitting with someone who does not know what is happening at this or her own firm.
Avoid the huge financial planning firms that make political and lobbying contributions to groups that create regulations and laws that are against investors. Definitely avoid large global and national banks and insurance companies that offer mutual funds and financial planning services, such as Well Fargo, Bank of America, JP Morgan Chase, Citigroup, Merrill Lynch, Morgan Stanley, Principal Financial and John Hancock that have huge trading operations that work against the interests of average investors.
Your best alternative is to go to a co-op or credit union that is owned by its customers and depositors. These have a very different ownership structure that is focused, client- or community-centric. It may surprise you, but the big global banks use your money to trade against you or to make policies that work against you. Just look at their lobbying contributions on www.opensecrets.org and see how your money is being used against you, the customer.
Given the proliferation of media today, no adult citizen should be uninformed about what is happening in Washington and at the state level to make it harder for average Americans to retire, be financial secure and not suffer a decline in their standard of living after they stop working.
In short, get informed or get poor. For too many Americans, the odds are already against them.