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Are You Destined to Be Part of the “Working Poor”?

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Don’t Be Surprised by Your Financial Future

Recently, a friend sent me an article from The Sydney Morning Herald. And even though this relates to a woman in Australia, many women in the U.S. and other countries are dealing with this same, financial issue.

Basically, after Kerrie Eather’s husband died last year, and she was laid off following an accident this year, she met with her financial advisor to review her financial situation. And although she made weekly contributions to her superannuation over 40 years being in the workforce, she was surprised to discover that she had a total of just $39,700 for retirement.

Superannuation (referred to as "super") is similar to the 401(k) plan of the U.S. and Japan, the IRA (individual retirement account) in the U.S, the RRSP (registered retirement savings plan) of Canada and the KiwiSaver of New Zealand.

In Australia, business owners are required to contribute a percentage (I believe it's 9%) of an employee’s earnings into their individual super fund. These monies are then invested in the stock market. Of course, as with all these types of schemes, a good deal of fees, commissions and expenses are paid to the brokerage firms managing the fund. Also, because these funds are invested in the stock market, your superannuation will go up and down depending on what the fund manager has invested your superannuation in.

The article states that Mrs. Eather doesn’t criticize the way Gillard, the prime minister of Australia, and his government have capped supers, but she also says it’s a “joke” and is “frustrated the government isn’t doing more to help workers like her.” As the article states, she “would have never considered herself to be one of the working poor. Now she does.”

Sound familiar?

Although this is a sad story, it may sound very familiar. After all:

  • Nearly half of women (44%) expect to retire at age 70 or older – including 19% of those who “do not plan to retire.” (Transamerica Center for Retirement Studies - Note: this study was done in 2010. That percentage may be higher today.)
  • 70% of U.S. women surveyed (Transamerica Center for Retirement Studies) are counting on their 401(k) (Let's hope it's more than Kerrie Eather's) and social security to pay for their retirement.
  • According to the U.S. Census Bureau, nearly one-in-five women (18.9%) over the age of 65 who are living alone, also live in poverty.

Avoid a Bad, Retirement Surprise

As I’ve discussed previously, you cannot rely on others to take care of your finances for you. You need to decide what your goals are, get the financial education to make those goals a reality, and most important, take ACTION on what you learn (The Triple-A Triangle™).

Of course, you don’t need to listen to me and you can let ignorance, fear and other people stand in your way. But when you get to retirement age, do you really want to be surprised to find out that you are one of the “working poor” like Mrs. Eather… or even worse… part of the poverty statistics?

That’s a surprise no one wants… so what steps are you going to take today to take control of your financial future?

Share your thoughts below. And for free, financial education resources, click here.

Original publish date: May 17, 2012

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