YMoYL: A Great Tool for The New Economy

The U.S. economy grew at an unprecedented pace over the past several decades until the recession hit last year.  Many Americans made significant shifts in their lifestyles to accommodate the downturn and are waiting now for the economy to rally again.  Yet the U.S. economy has permanently changed in ways that the average American may not realize.  Just one generation ago, for example, credit card debt was uncommon and many workers could rely on a pension and full health benefits after retirement.  Today, credit card debt averages $10,000 per household, private pensions are rare, Social Security is at risk, and seven out of ten workers have saved less than $10,000 for retirement.  Millions of Americans now face a future of great economic insecurity, and experts lament that retirement itself is at risk.  We have entered an era of The New Economy where the average worker no longer stays in the same job for decades, unions offer much less financial protection than before, and most workers are completely on their own in terms of providing for their financial future.  I used to resent that things had changed so much.  I wanted the safety and security that my dad had after working for the same company for 30 years and retiring with a full pension and great health benefits.  Most recently, however, I’ve begun to conclude that a personal retirement portfolio that relies heavily on a corporate pension might not be so safe after all.  We’ve all heard of corporations that experienced hostile take-overs where their retirement accounts were raided, or the Enrons of the world where management practiced shameless malfeasance, or a corporation (like some in the airline industry) that fell on hard times and simply couldn’t meet their retirement account commitments as promised.  Although my heart still longs for a pension like my dad’s, my head has chosen to follow the Your Money or Your Life nine-step program as my retirement strategy.