Here is the financial profile of many people you know:
In 2007, Americans had a zero savings rate and totally inadequate savings to put against the liabilities they will face over the course of their prolonged retirements. After the market panic and the recession of 2008–2009, what little savings they had were drastically reduced (even though the savings rate rose above zero), alongside the value of their biggest single asset—the equity in their homes—vaporizing nearly everyone's plans for a serene retirement. This means many Americans are going to be opting for the Hindu ideal, where old people forsake all worldly possessions, pick up a begging bowl, and wander the streets. Except in our case, it won't be voluntary.
We are sliding down this road on greased skids. If we do nothing more than follow the dictates of our heart and our culture, it will lead us to financial ruin.
As young people, we spend every dollar plus whatever we can put on Visa to buy clothes, cars, cocktails, vacations, dinners, and entertainment. Our pocketbook is small but our wants are great. Why shouldn't we have it all?
Then, as middle-agers, our wages increase but our needs expand even faster. We need McMansions and sports-utility vehicles. We need designer furniture. We need to send our kids to private schools. We need significant, broadening travel. We also may have to kick in to support our own aging parents.
By the time we retire, the piggy bank is empty. We open ...