Dalanee got a letter a few weeks ago saying she had unclaimed property in Florida, and we almost threw it away thinking it was junk mail. Turns out it was real. We went to FLTreasureHunt.gov, which is run by the Florida Division of Unclaimed Property, and sure enough, there was money sitting there with her name on it. The site holds funds from forgotten bank accounts, uncashed checks, old security deposits, insurance payouts, and similar things that companies are required to turn over to the state when they can't locate the owner. After we claimed ours, we started typing in friends' names just for fun and found money for several of them, too. The state says one in five Floridians has something waiting. It takes two minutes, it's free, and it's your money. Go check.
Went to my first HOA meeting at the new house last week. There are only eight homes in the development, dues are $1,000 a year, and everybody pretty much keeps to themselves. There's almost no shared space to fight over, and the meeting was refreshingly low-drama. In fact, we mostly talked about football. That's exactly how an HOA should work. I've heard too many horror stories about associations that fine you for leaving your Christmas wreath up on December 26th. It's basically just a way to make sure nobody parks a derelict RV in their front yard, and I'm completely fine with that.
A bad dog rolled around in something gross yesterday.
Are you concerned your kids are not properly preparing for retirement? You may have good reason.
According to Business Insider, only half of Gen Xers have a retirement account, and only 36 percent are actively saving for retirement. That's a problem in the making. Millennials, interestingly, seem to be starting earlier and saving more consistently. But the bigger concern I'm seeing in my own practice is a generational shift that worries me.
Ten or fifteen years ago, most of my clients arrived at retirement in solid shape. If anything, they had saved so well that they weren't spending enough. Many were dying with money still in their bank accounts. That was a good problem to have.
Today I'm seeing the opposite. People want to retire earlier, but they haven't saved enough to support it. The math simply doesn't work, and the gap is growing.
Here are a few things to pass along to your kids.
5 Tips to Give Your Kids About Saving for Retirement
1. Pay yourself first. Savings should come automatically from your paycheck or bank account before you ever see it. Don't promise to save whatever is left over at the end of the month. It doesn't work, not even a little. This tip matters more than all the others combined.
2. Give until it hurts. If $200 a month feels comfortable, have $400 or $600 deducted from your paycheck and deposited into your 410k. Pick a number that feels a little scary. You can always lower it if needed, but in my experience, most people adjust quickly and find they can handle more than they thought. No one goes back and increases it.
3. Use a 401(k) or IRA. These accounts offer tax deductions and deferrals. They also keep the money more "tied up" than a regular savings account, which can actually be a good thing. It makes you think twice before raiding it for non-retirement reasons. And if your employer offers a match, take full advantage. Don't leave free money on the table.
4. Your kids should put 100 percent of their contributions in the stock market. For long-term retirement investing, don't overcomplicate it. Historically, stocks have returned an average of around 10 percent annually over meaningful time periods.
5. It's not just how much you save. It's how long you save it.
The table below assumes $100 invested monthly into a retirement account, 100 percent in the stock market:
First Number = Starting age of saving
Second Number = Total money saved up until age 65 ($100/mo)
Third Number = Value at age 65
Age 20
$54,000
$948,000
Age 30
$42,000
$357,000
Age 40
$30,000
$133,000
Age 50
$18,000
$42,000
That table never gets less eye-opening, no matter how many times I share it.
A few bonus thoughts:
In my business, there's an old saying: to be financially successful, you need to follow one rule. One spouse, one house. Divorce is hard on anyone's finances, and a second property is almost always a money pit.
Watch out for lifestyle inflation. When income goes up, the temptation is to upgrade everything. The smarter move is to upgrade your savings rate instead. This is one of the biggest financial mistakes I see among Gen Xers.
Your monthly budget matters much much more than your 401(k) balance.
And finally, encourage your kids. There's no reason to make them feel bad about where they are. The best time to plant a tree was thirty years ago. The second-best time is today.
Be Blessed,
Dave