Shifting Landscape

It can be easy to point the finger at individuals and say that they have not done a good job at managing their personal finances. There is a lot of truth to that. Spending is high. Debt is high. Saving is low.

However, this is far from the entire story.

Imagine environment A

• A house is 1.5 x your annual income

• A 4 year college degree is about 10% of your annual income

• A car is 33% of your annual income

• Basic cost of living is less than 50% of your annual income

• The S&P 500 is at 118

Imagine environment B

• A house is a minimum 5x your annual income

• A 4 year college degree is 200% of your annual income

• A car is 75% of your annual income

• Basic cost of living is 90% of your annual income

• The S&P 500 is over 3000

Which one would you like to operate within to save money?

Environment A, for reasons that should be obvious, is much more favorable.

These two environments represent two different financial landscapes and yet we are asking people to be equally successful and achieve the same outcome in both.

This is representative of how we are treating the current retirement landscape.

Environment A represents the way things were in 1980.

Environment B represents the way things have changed in 2020.

None of that has any much to do with individual personal financial behavior and everything to do with the market and environment people are operating in.

What most of the sub-50/sub-150 are trying to do is utilize the financial advice and financial products from Environment A because those are still what is presented as the way forward. The major problem with this is that we have not been living in financial environment A for quite some time.

It is no wonder why things are not working though we continue to move forward with this pattern with the destination being The Future Poor.