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“Hoping That Everything Works Out” is not a financial strategy

Sometimes I have to wonder how people can live their life without a single plan of how to manage their finances and eventual retirement. I was reminded of this when I came across an article about how retirement is a ‘romantic fantasy of the past’. This is no way to a financially independent future and all good Followers would certainly cringe to hear such a thing.

Yes indeed, the future is uncertain, which is why it’s important to stick to a plan and not lose your head when the market has a downturn or a recession comes around. A Follower does not find it “useless to plan for retirement when everything¬†is uncertain” that’s for sure. A recession is a small wave that will gently wash over you as you plow forward with your investments. You’ll come out the other side without a care in the world because you know that the market will always come back up (Historical S&P500). All you have to do, as always, is keep your spending low and your saving high.

A particularly incredible bit of information is this segment

Both generations agree that credit cards now function as a survival tool, the Allianz study finds. But Gen Xers report carrying 82 percent more nonmortgage debt (student loans and credit cards) than Baby Boomers.

What. If you have more than $0 in credit card debt you are in a bad situation. A horrible situation. It is not difficult to understand the concept of not spending more than you earn, and yet here we are with millions of people carrying credit card debt around for years and years.

And I surely don’t believe that a significant percentage of these people are people living in poverty. I think we all know that these are middle-class people spending far beyond their means for no good reason. A person (or couple) making a reasonable salary and sound financial choices should have no problem retiring at 65 even with a very conservative savings rate.

Do you see any problems in your retirement future? Do you think that financial independence is a romantic fantasy?

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