Shop-lifting Grandmas

Today's post is less about actual practical applications of investing, as it is an argument for saving. Two recent events caught my eye, both of which stress the importance of saving, then investing those assets yourself or via a financial fiduciary.

If you've been listening to the news recently, you have learned that the city of Detroit is having severe financial problems. A portion of those problems stems from the city’s obligations to it pensioners. In the end, those pensioners may not end up getting what they were promised, most especially younger employees. It's bad news for the pensioners of Detroit, but we can learn something from this event. What is the lesson? The critical nature of self-sufficiency.

...if you have a pension, save and invest as if you do not.

Across the lake, another very interesting thing is happening that speaks to the value of savings. In Japan, there is a proliferation in the increase of senior citizens shop-lifting – for groceries. Yep. You read that right. The article in Bloomberg Businessweek states that “more elderly are turning to crime, often out of hunger.” Why? The Japanese government has cut pension benefits in an effort to curb the national debt. Can you think of any other governments with outsized debt? I’ll give you a hint: You’re living in it.

The moral of the story is that you must save your own money and invest those assets yourself. Depending on someone else to do is mistake. Why? Because that someone else has a lot less interest in your comfort during retirement than you.

Save and invest as if Social Security may never materialize – because that just may be the case.

One could make the argument (I do) that any sort of future payments should not be considered in retirement planning. That is, if you have a pension, save and invest as if you do not. The same applies to Social Security – most especially for younger individuals. Save and invest as if Social Security may never materialize – because that just may be the case. In the event that the pension or Social Security does come through, that’s terrific. And it’s likely that’ll you be taking some extra vacations during your golden years. In a worst case scenario, you will have your own assets to rely on.