I personally know some of these people with money problems. And it is terrible to see their lives of quiet desperation. It is painful because most of their money problems could have been easily avoided.

Who? Why?

These are people of my generation—I’m a baby boomer who was born in the 1950s—who have saved or invested little or nothing through most of their working lives. These boomer busts are going through horrible times. That’s because they never built up, or even tried to build up, substantial assets on a regular basis. Today I know some of these boomer busts who are facing retirement with little or no assets. These are people who expect to live on Social Security payments, which are too small to provide the primary retirement income for anyone. These people face painful lives at a time when their years are anything but golden.

What happened to these people?

It is the same thing that is happening to the rest of Americans who are not saving; who consume too much and forget that savings and investments are as essential as almost any consumption item. They are essential if one is to maintain and or improve one’s standard of living—getting that first home, sending the kids to that special private school, etc.—and ensure that they later avoid the retirement problems that many of my generation are experiencing at the worst time. This is the time when their most productive earning years are usually behind them.

How does one avoid making the mistakes of many of my generation?

Decades of Investing, not Gimmicks

As with conquering any long-term problem, one makes a serious commitment to change; avoiding gimmicks and making a commitment to sensible spending and saving on a regular basis over a long period. This is a position that has been advocated by some of the smartest people I know.

“The only reliable route to a comfortable retirement is to build up a nest egg slowly and steadily,” writes Burton G. Malkiel, a brilliant stock market observer in his book “A Random Walk Down Wall Street.” However, Malkiel worries that “few people follow this basic rule, and the savings of the typical American family are woefully short.”

Indeed, a lot of people I know—both young and old—are doing anything but taking a “reliable route.” Follow that route and you will be putting money into good investments—I prefer index funds—on a regular basis over a long period. It means putting money every pay period into a qualified retirement account—such as a 401(k) plan that is often matched by employers—and keep doing it over decades. It means leaving that money alone. One doesn’t break into this independence fund for superfluous spending. Is that too much to ask?

For many Americans and Europeans, it is. So they end up like my boomer busts contemporaries. They live on Social Security payments—which might be around $20,000 a year. That is a measly amount if this is your primary retirement income—and not much else. So some of them—reluctantly—will be working into their 60s or even 70s. That is something most people, in their 20s or 30s, don’t envision doing and yet that is what is happening to many people today.

Escape Strategy

Can one avoid this cruel fate? Yes, you can and it doesn’t require a huge amount of self-discipline. It requires some. It requires a plan and a reasonable commitment to financial sanity.

Try the automatic pilot. Indeed, try sloth. That’s right–try investment laziness. First, commit to automatic saving and investment at work if you have a retirement plan and do it asap (Do it yesterday!). Besides work savings, set up your own personal savings and retirement program. Have the money automatically taken out of your checking account and put into your mutual funds. And in both cases, it doesn’t have to be huge amounts.

If you’re beginning in your 20s or 30s, try somewhere between five percent and ten percent (If your employer matches your retirement contributions at work, your five percent can become ten percent and you usually get a tax break to boot). Obviously, if you are beginning at a later date, say in your 40s or 50s, then the percentage you save and invest should increase.

Then, with these saving and investment tools set up, get lazy. That’s right. Sit on your duff and let the money keep going into saving and investment tools. You’re on automatic pilot. Don’t do anything. That’s the philosophy of one of the smartest investment minds around, Warren Buffett.

“Lethargy bordering on sloth remains the best investment style,” says the Omaha Sage.

Invest like Buffett—invest on a regular basis over decades. Let your money compound for a while. The results of this compounding and sloth could be almost as spectacular as Buffett’s. More importantly, you’ll never have the problems of the boomer busts. You can reach a point where you can help others; where you can do whatever you want with the rest of your life because you have achieved financial independence.


Gregory Bresiger
Gregory Bresiger

Gregory Bresiger is an independent financial journalist from Queens, New York. His articles have appeared in publications such as Financial Planner Magazine and The New York Post.