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The middle class challenge

By Barbara Whelehan ·
Friday, October 25, 2013
Posted: 3 pm ET

Are Americans completely out of touch with reality?

Six out of 10 middle-class Americans say their chief financial concern is "paying the monthly bills," according to the latest Wells Fargo Middle Class Retirement study. That's up from 52 percent last year.

Paying bills is important, so I'm not surprised it's a top day-to-day concern. But this finding struck me as incomprehensible: 42 percent of middle class Americans say it's impossible to save for retirement and pay the bills. Really?

Fully a third plan to work until "at least 80" because they don't expect to have enough saved.

How many 80-year-olds do you know in the workforce?

Most of those surveyed -- 877 out of 1,000 people -- were between ages 30 and 75 and earning somewhere from $50,000 to $99,999 or had investable assets of $25,000 to $99,999.

We're talking about people who have or make decent money.

The study also revealed that people suffered both fear of the stock market and apathy about investing:

  • 52 percent are afraid of investing in the stock market because of its volatility.
  • 51 percent overall say they have "little interest in learning about investing."
  • Among those with little interest in investing, 60 percent are in their 50s and 60s.

Is it possible for middle-class Americans to pay their bills and save for retirement?

"In general, the best way to assess their situation is to develop a budget and a plan for saving," says Laurie Nordquist, head of Wells Fargo Institutional Retirement and Trust. "Working with a budget and a plan for saving for retirement provides the roadmap. In our survey, we saw that across income levels, those with a plan saved three times more than those without."

On the same planet but in a different world

As I was pondering our nation's apparent lack of interest in retirement planning, I heard a piece on NPR Friday morning about what poor people in Africa do with money that is sent to them directly. Do they squander it on tobacco, alcohol and gambling, or do they invest it in something worthwhile? The story by David Kestenbaum opened with an interview of Kenya's Bernard Omondi, who had expressed delight after receiving $1,000 in cash -- "roughly what he might have made from a year of work."

A study by Innovations for Poverty Action found that recipients of money used it toward better food, health care and their children's education. Some invested it in a small business or bought cows. The study found that getting money reduced stress levels among the poor.

I wonder why Americans are so stressed out about their bills. A thousand dollars can do so much to boost the quality of life for indigent people. But here in the land of opportunity, many people find it impossible to set aside 10 percent or more of their relatively generous incomes toward retirement.

Do you find this unfathomable?


Follow me on Twitter: BWhelehan.

Barbara Whelehan is a co-author of "Future Millionaires' Guidebook," an e-book by Bankrate editors and reporters. It is available at Amazon, Barnes & Noble, iBookstore and other e-book retailers.

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October 30, 2013 at 12:50 pm

I have recently retired at age 60 after suffering through a lifetime of ridicule and skepticism from peers, etc. I did not drink, smoke...spend money on drugs or take exotic vacations except through my job requirements. I kept always kept automobiles more than 3 years after payments are completed.

All of this wasn't easy. I agree with the comments I see. But nobody said it was going to be easy. for those comments about not "investing" your moneys...I would only ask you to consider then what you have put away in savings. Investing is about diversity and tough choices...but if you aren't disciplining yourself to put money away every payday....your comments are irrelevent. Investing has to do with how much you can keep your savings current with has nothing to do with whether you will have money for retirement or not.

Good Luck to all in your tough choices! I do believe that my savings, investments and awareness of choices saved me. I didn't have any free money from family or other inheritance/sources to help me.

October 30, 2013 at 12:43 pm

Consumer spending fuels our economy and with it the inability to separate wants from needs. With instant credit, buy now pay later promotions and of course keeping up with the "jones" the spiral of debt continues. Until we address needs first and save for the wants, retirement for a lot of people may never happen!

Scott Schmidt
October 30, 2013 at 10:34 am

If people would make their own economy instead of letting the economy make them, they would be better off. Go find a way to make it work, cut back on expenses, that means live on a budget or go find a way to get an extra stream of income coming in to help with saving. People have a choice on how they live.

Doug Scarboro
October 30, 2013 at 10:14 am

Well, You brought up this topic on Retirement and Investing. I would have loved to be so optimistic as you Barbara. But unfortunately (I guess?) I am not. Wall Street is asking that we invest in America the World even. Lots of folks were doing that yet they lost it in the recession. Now with the deficit issue,do you not see another recession and or this time a depression? How high can the limits go? Its a big wonder! I personally chose to invest in my home. To have it paid off. With the word of Social Security ending most likely in my lifetime I find that the solid place to stand. After the house was paid off ,now maybe I could consider gambling with stocks,but nahh...That darn deficit!

October 30, 2013 at 10:03 am

Do they offer grants, scholarships and student loans for retirement? No!
These young adults can find a way to get their education. Save for your retirement. Do you really think your kids are gonna take care of you once they have started carriers and a family and is that what you really want out of retirement? Your kids won't do it for you do it for yourself.

October 30, 2013 at 9:59 am

I have short comment to say. Youand me pay for what we get what we comment to and what we owe. It is never an one way street. It goes both ways. if you believe in having most everything up front or we save for later yesrs. neither decision makes it easy. nothing is easy ever. if you decide to live and life makes decisions (all your decision anyway) you pay in either end. How you are able to tap dance with money ups and downs is a take your best shot. It will be terribly hard to get any handle on what to do. No man will be able to make either harder or easier for you. it just is life give it your best shot and accept the consequences and get on whether you think it is long or quite short. get it.