You are Your Own Financial Safety Net

by TTMK on February 3, 2014 · 15 comments

financial_safety_netIt’s great to have optimism, as it’s more fun to think of the upside to a situation than to think of why something won’t work.  When it comes to money, it can be helpful at times to avoid negative thoughts and simply focus on the possibilities of different jobs, business ventures, and potentially even investments.

Actually, I think that’s probably true in life as well.  A can-do attitude is forward thinking, and focuses on possibilities rather than limitations.

But the thing is, I think we need to think of the problems and limitations of different situations.  There are big risks sometimes if things don’t work out the way we hoped.  This applies to retirement savings, as it’s important not to have our head in the sand and just hope that things work out.  We need to take an active role in saving for retirement, take it seriously, and realize that there will be nobody to bail us out.

I wonder if I’m in the minority with that viewpoint, based on some stats I came across in a recent article in the WSJ, via Yahoo.    According to that post, 3/4 of Americans between the ages of 45 to 64 have less than $27,000 in their retirement accounts.


Actually, a full 1/3 don’t have any retirement savings at all! Even if someone is at the low-end of that range, 45, it wouldn’t be fun to have zero retirement savings.  It would be tragic for someone in his or 60s to be broke.

I wonder how someone gets to that point.  To be sure, there are likely many people who had truly unfortunate circumstances to get to that point.  Things such as major health issues, job losses, divorce, accidents, and things of the like could decimate someone’s finances.

But you have to think that it’s not all a series of unfortunate stories that make up the whole picture.  Surely there are millions upon millions of people out there that simply didn’t take retirement savings seriously.  How that happens is remarkable, but it’s true.  Some people apparently can’t engage in forward thinking, which is too bad really.

Recent news of the “my RA” retirement vehicle is interesting, and a nice step toward getting more people to save for retirement.  Nothing spectacular, but at least it’s something.

But really, there is no program that I know of that can be counted on to truly save anyone.  Actually, I think it’s more profitable and even safer to not count on anybody or anything to bail you out.

Frankly, I think that while I might be helpful to some people, I can’t expect or count on anybody helping me out.  You can’t control other people, or be blindly optimistic as I rambled on about earlier.  Best to take individual accountability for your own finances, don’t you think?

I wonder what goes through the minds of those who are in that age bracket who has zero savings as a result of not paying attention.  My guess is that they simply don’t think, or maybe just assume that things will somehow work out in the future.  As if there is some safety net to catch their future financial fall.

Being under that age bracket, I don’t want to be anywhere that situation when in that bracket.  No way.  That’s just scare to think about, honestly.  Best to be independent and be your own safety net.  There truly is no other safety net other than yourself.

No government program will really bail you out.  No mystery benefactor will likely emerge.  Don’t expect your spouse to provide for you.  Don’t think that your kids will want to take care of their parents in old age either, or will necessarily be able to.  Hopefully so, but you just can’t count on it at all. You may not get any significant financial inheritance from parents, if anything at all.

Bottom line is that for each of us, our ship won’t magically come sailing in.

Rather, being personally accountable and being our own safety net seems like the way to go most of the time.  Seems quite liberating actually, since you’re able to control your own actions much more than those of others!

My Questions for You

Do you believe that you are your own financial safety net, or do you expect to count on others (and/or their money) to be there for you in the event you have a time of financial need?

What are your thoughts on the idea that 3/4 of Americans between 45-64 have less than $27,000 in retirement funds?

{ 15 comments… read them below or add one }

Little House February 3, 2014 at 9:12 am

I was one of those people in their 20’s and even 30’s that kept thinking I had plenty of time to save for retirement. I kept putting it off. Now that I’m slightly older, I’ve realized I was a complete fool. Thankfully, I have a few things working in my favor – a pension fund and now some investments. I have to work harder to “catch up”, but it’s not impossible, just more work. For those out there without much savings, it could be they also thought they’d have plenty of time and “tomorrow” to worry about it.


TTMK February 4, 2014 at 1:06 am

Little House, what’s great is how you’re taking the bull by the horns and setting goals this year (and reaching them thus far). It could be easy to wallow in the past and be upset about things that might have been overlooked, but you’re tackling it with a can-do approach.


Nick @ Step Away from the Mall February 3, 2014 at 10:26 am

Totally my own. I’ve been saying that I want to work my day job only because I love it and not because I need it. I happen to really enjoy what I do, but I also happen to need the money from it for the time being. But through working on some side hustles, I’m planning on continuing to work it just because I like it with the comfort that my cash flow would be fine if I lost the job.


TTMK February 4, 2014 at 1:04 am

Awesome, great stuff! Diversification at play, which is a nice way to minimize financial stress.


Stefanie @ The Broke and Beautiful Life February 3, 2014 at 10:41 am

“our ship won’t magically come sailing in”- truth.

This article makes me feel a lot better about my 10k in retirement savings (as a 20 something).


TTMK February 4, 2014 at 1:03 am

Well, if it makes someone feel better that makes me happy 🙂

I wonder how many folks out there really do think their ship will somehow come sailing in rescuing them from their mistakes or bad fortune. While some things are hard to come back from, hopefully many people can avoid bad outcomes by planning ahead and taking action.


David S February 3, 2014 at 3:51 pm

We should probably define what we think of as a safety net. It is that net at the bottom to catch the unlucky fellow who falls off the high wire, cliff or other high object. It usually prevents them from dying and perhaps even serious injury but it is a last resort. Does a safety net get me to where I am going (or trying to accomplish)? No, they are there to keep me from dying when I fall. If I want to go anywhere then I have to get up and out of the safety net.

Just like in finances we have safety nets all around like Food Stamps, Social Security, Homeless Shelters, etc. Do these programs get you to where you are going (comfortable retirement)? No, but they do prevent you from dying from cold, heat, starvation, dehydration, etc. I could never replace these safety nets, however I can stack the odds in my favor of never needing them. Investing in my retirement, emergency funds, never carrying a CC balance (or if you do it is because you have the money to pay it off but are getting paid at an after tax rate higher than the CC interest rate), semi-monthly financial discussions, etc. All these are more like a safety cord and a high wire balancing bar that maintains my balance and secures me to the high wire of comfortable retirement. Yes I could still fall into the government safety nets, but it is unlikely due these savings.


TTMK February 4, 2014 at 1:01 am

Good point, in that how a “safety net” is defined is something that could vary. If social programs and such are considered safety nets, then yes – our savings and other cash flow can be that buffer that allows us to avoid that safety net. At least we might have a bit more control over what we do vs. what others will be willing to do to help us in times of need.


jim February 3, 2014 at 4:57 pm

I seriously question the WSJ article that says 3/4 of Americans between 45-64 have less than $27K saved for retirement. Sorry, I’m just not buying it. I’m in that demographic and we have more than 10X that amount, as does every person in that demographic that I know. Call me a skeptic, but I’m not buying that line.


jim February 3, 2014 at 5:09 pm

oops, not more than 10X that amount – more like 300X that amount. And, at least the people I know in the middle of that demographic, have gotten their kids thru undergrad debt-free or close to it and working hard to finish off their mortgages.


TTMK February 4, 2014 at 12:55 am

When I read 10x that was more in line what I would think could be middle class norms, but 300x is way over. Actually 300x that amount would be over $8 million. That would put someone squarely in the top 2%, wouldn’t you think? At the very least, that would be WAY over the norms, astronomically higher than the average person in that or any age bracket.

I’m at an age a bit lower than that bracket, but most people I know I my circles are solidly middle class or a notch above. Yes, I’d say most will probably be paying for a big chunk if not all of their kids undergrad educations and will be paying off mortgages by the time they’re late in that age bracket that’s referenced.

However, we’re again talking about a middle class or higher likely as the reference point. There are people out there struggling to make ends meet who simply don’t have money. As hard as it is to imagine for many of us who either run or regularly read personal finance blogs, I think that having next to money is sadly the norm for tons of people out there. It’s believable to me that tons of people in that age group have only a minimally positive financial net worth, and probably couldn’t imagine paying kids education much less a mortgage loan in full.

Best to be our own safety net!


David February 3, 2014 at 8:30 pm

Thanks for boosting my confidence in my savings.
When it comes to finance, optimism is the best way of relaxing.


TTMK February 4, 2014 at 12:41 am

Sure, of course optimism and realism can be balanced for better results 🙂


SuburbanFinance February 3, 2014 at 10:46 pm

I believe that we are absolutely our own financial safety net. I think that statistic is just scary.


TTMK February 4, 2014 at 12:38 am

Yes, we totally are our own safety net! That’s not a pretty statistic, no doubt about that.


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