Friday, October 30, 2015

Thrifty Thinking: Millennials and Retirement

Will millennials ever be able to retire? Well, that all depends on who you ask. The Institute of Consumer Financial Education (ICFE) founded in 1982 and based in San-Diego is dedicated to helping people of all ages improve their spending, increase their savings and use credit wisely.

Paul S. Richard, Executive Director of the ICFE, offers a few of the following tips to help consumers improve their spending practices: 
1.      Create a plan of action to make the necessary changes
2.      Construct a cash-flow sheet showing income and outgo
3.      Set up and implement a monthly spending-plan
"People whose spending may need a little mending in order to come within suggested budget and expense guidelines, often discover they are paying too much for things because they fail to comparison shop. That practice, like borrowing to meet regular expenses, is another form of overspending. It is everyday spending decisions, and especially credit based spending decisions, that will cause severe erosion of one's financial future," added Richard.
I had a chance to interview Richard to learn more.
What is the first step people should do if they aren't sure whether or not they're ready for retirement?

Complete a net worth statement to determine assets and liabilities. Once net worth is determined - calculate how long it took, in terms of working years.  ($250k net worth over 20 working years =
$12,500 accumulated per year) If they made an average of $80,000 during those 20 years or 1.6 million it is easy to see they didn't save very much.

If there is enough income to live comfortably and still pay down the debt, it might be time to consider retirement. However, if debt levels are high, continue working until
debt is eliminated. Retirement often means a reduction in income and
taking on new debt after age 50 or 55 can delay retirement.
How can a cash-flow sheet help? 
It shows the daily flow of your money, income and payments - helps determine if there is enough income to cover all items.
What types of things need to be included in a monthly spending plan? 
All sources of income, including anticipated gifts, retirement, et-al. Every known monthly expense. Plans for savings and accumulations.
The Institute of Consumer Financial Education (ICFE) was founded as a non-profit organization in 1982 to help consumer improve spending habits, increase savings and use credit more wisely. Working in cooperation with government and business, the ICFE offers several certification programs with continuing education Units and Professional Development Units including Certified Identity Theft Risk Management Specialist Program and the Certified Consumer “Debt Collection Compliance Specialist®. Paul S. Richard is the ICFE President and Executive Director. To learn more about ICFE visit their websites at and

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