80% Of The Working Population At The Age Of 40 Are Financially Screwed

Written by: Daniel Richard

40s and still can’t meet any financial goals? – cc alancleaver

Yes, given Parento’s 80/20 distribution concept, it is fair to say that 80% of the working population at the age of 40 years old and above today are totally screwed financially.

This proclamation is based on a real family that I got acquainted with recently, where they are (read: claimed to be) deeply in debt, with the husband holding low-income jobs. This week alone, 3 members of that family had been hospitalized with each of them requiring medical treatment for a span of 2 to 3 days.

What were the odds for even 1 person to fall seriously ill out of a sudden?

Looking at the random faces we see in public daily, I wonder how many of them might fall into the same category as that family mentioned above? Where they have insufficient savings to tide them through till the end of the month, and mindlessly waiting for the next pay day only to go through the same vicious cycle over and over again?

Well, it was before this week of the sudden news of the 3 people requiring emergency medical treatment when the sole breadwinner acknowledged that he badly needed to save. Only procrastination (the lack of personal responsibility) with the unforeseen circumstances that only made their situation worse off today.

What went wrong?

Nothing went wrong. No one would have expected such a possibility occurring out of the blue in the very first place. However, it was this attitude towards the unknown future that only made one ill-prepared for an even such as the real-life example above.

What is the least amount of money that one need to have by 40?

It is common wisdom to have at least 6 months worth of savings (as of recent income) for liquidity due to rainy day seasons and unfortunate incidents.

Given that an average working adult makes $2,000 a month, 6 months worth of replacement source of money makes it only $12,000.

Anything lesser than $10,000 shows that the person is in a tremendously bad financial state. If anything terrible were to happen, one hospitalization bill alone would immediately wipe out whatever savings that he or she would had been storing up for years.

In fact that amount is only a bare minimum. It is definitely not enough to talk about leaving behind a legacy or even being able to live comfortably.

Have a financial strategy: There’s still hope…

For someone in his 40s, it is still not too late to start building up a retirement fund. Gradual savings and a little diversification from a comfortable budget to earn interests and rate of returns is a sound financial strategy.

If you happen to be someone in the early 20s, that should be the most basic of strategies to adopt and apply immediately from the very first job!

Question and Action

Which point of time are you in your life right now? Wealth accumulation is an important factor to get you closer to financial liberation.

So are you going to be totally screwed and unprepared when you are in your 40s with less than 10 to 15 years more before hitting the retirement age? Or would you rather be at a position where you are certain and confident that you are well prepared for any unforeseeable circumstances like the real incident that was told at the beginning of this post?

I certainly hope that this post gets you thinking right now.

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