Losing half of my income by going into retirement was a really shocking eye-opener for me. I had obviously not done enough saving. How could that be? I felt terribly. I felt that I was a failure in some way. It only dawned on me later that I could only have saved more by earning more or by reducing expenditures in other areas; in other words, by adopting a lower standard of living while working. I also realized that millions of other people were facing those same kinds of choices all of their lives; eat healthy or eat poorly; raise the children in poorer, rougher neighborhoods or in nicer, safer neighborhoods; send the children to inferior schools or send them to better schools; take vacations to new, culturally stimulating places or go to see the same relatives every year.

I want to be very clear. If you or other people eat poorly, rear your children in rougher neighborhoods, send your children to inferior schools etc., by choice, that is perfectly all right. One of the wonderful things about this great country of ours is it does provide us, all of us, the freedom to choose. Does that mean that we prudently exercise our right to choose? The answer to that question is a resounding NO! Do I believe that most people choose not to save? My position, and you will see it again and again throughout these articles, is that paycheck-to-paycheck employees do not earn enough money to live the lives they desire while working and to save for the retirement they desire as well, so I certainly do not blame them for the situation in which most people find themselves come retirement time. Remember, I was in the same situation.

In the United States today, inequality in wealth, wages, and income are historically high. About 95% of the population retires to levels 20 to 50 % lower than their pre-employment income. That new, reduced income level generally becomes fixed, with the exception of occasional "cost of living" increases from Social Security. Only about 5% of people in the United States retire financially independent. I define financial independence as having income from assets that provides levels of income sufficient to support your living standards whether you work or not.

Expanding global competition, changes in the nature of work, the out-sourcing of work, out-of-control un-documented immigration, and rapid technological advances are altering economic reality. Yet many of our policies, attitudes, and institutions are based on assumptions that no longer reflect real world conditions. One constant, however, is the fact that most people who work for a paycheck do not become financially independent, even with the aid of the best financial planning.
Another major question for you to answer for yourself is: Can you even survive mergers, down-sizing, lay-offs and other adverse factors and maintain your present or a comparable job until retirement?

Remember, you do not have to live on less in retirement. No matter where you are right now financially, you can build and enjoy a retirement lifestyle you desire.