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It's not just one problem. There is a whole host of problems with our financial system and the way that Americans have been conditioned to spend and save their money. Here are some of things that contribute to The Problem:
We have Innovative Solutions to help you eliminate these problems from your financial life. And by eliminating these problems, you'll be on your way to becoming a Safe Money Millionaire and enjoying a more satisfying, less stressful life.
Let's look at some of the components of The Problem a little more closely.....
For most Americans, gone are the days of looking forward to a company pension plan at retirement. Most pension plans (a fixed stream of income - also called "defined benefit" plans) have been replaced with defined contribution plans - 401(k), 403(b), and 457 plans. These plans are much less expensive for employers, and the burden of managing the funds in these plans falls to the plan participants.
So how has it been working?....
How is your 401(k) these days? Have you regained the losses you've had over the last decade? Maybe the stock market is on a great upswing... We all know it can't do that forever, and no one knows how low it will go in the next crash.
Are you tired of riding the stock market roller coaster?
Based on "average returns", is your nest egg as big as it should be? (See the Rate of Return Myth here.)
Does the following "conventional" investing advice sound familiar?
How has this conventional wisdom worked for you? How well do you think it has worked for the "average" American? Here are some statistics:
How is this working out for you? Did you squirm when you read that list? Do you see yourself in any of these statistics?
What if a spouse in a dual-income family requires extended rehabilitation or in-home care to recover? Or what if a spouse becomes permanently disabled and needs lifetime assistance with daily activities?
Unfortunately, these situations occur without warning and families must make major life decisions immediately, far too often without adequate resources.
While many working adults may have medical benefits, what about loss of income for extended periods? Will disability benefits (if eligible) be sufficient to pay for all of the everyday expenses such as rent/mortgage, groceries, utilities, lines of credit, insurance, etc?
Critical illness causes over half of all personal bankruptcies.
Do you own a small business? Would that business continue to function properly if you were unable to work in that busines for an extended period due to a critical illness or injury? What if you were permanently unable to work in your business?
Almost half of all business failures can be attributed to a critical illness or injury.
"The American public has been hoodwinked by political and corporate forces into relying on the 401(k) as the primary long-term investment mechanism. In doing so, the stock market has been put at center stage in providing for a comfortable retirement for the average American. The 401(k) represents an implicit promise to middle-class Americans that they can live off the income that they receive from stock ownership, just like the rich do. It is a promise impossible to fulfill; it is the great 401(k) hoax." (7)