Some Lessons Cannot Be Learned from an iPad
By Dennis Miller, Editor, Money Forever
Last fall, my wife Jo and I had the pleasure of spending a weekend at our daughter Holly’s home, reveling in the joy of our two grandsons: three-year-old Brock and eight-year-old Braidyn. With young boys in the house, the atmosphere can get quite raucous. Their boisterous energy, combined with the noisy games they play on my iPad, creates a lively environment. My wife often chuckles when she sees me turning off my hearing aids… Ah, sweet relief from the chaos.
Reflecting back, I remember my great-grandmother, who was still alive when I was Braidyn’s age. Sitting on her porch swing, her walker resting beside her, we’d snap peas and shuck lima beans together. Her stories of life after the Civil War linger in my mind. As I watched Brock and Braidyn play, I pondered whether my great-grandmother—born in 1860—ever thought about what the world would look like when I reached adulthood.
Watching Brock navigate the iPad, I found it hard to fathom the world he will inhabit 70 years from now, when he will reach my current age. What will work look like for him and Braidyn? Will retirement even be a possibility? How long will they expect to live?
When I commented on the remarkable skills of a three-year-old using an iPad, Holly reminded me of how I used to joke about her classmates looking like little paratroopers as they got off the school bus with their heavy backpacks. She pointed out that today, middle schoolers receive iPads from their schools to access all their textbooks and take tests. Yet, she expressed concern that the children aren’t learning to write or communicate as effectively.
Preparing for an Uncertain Future
As a concerned grandparent, I began to reflect on how to best prepare my grandchildren for a future I can’t fully envision. A clear insight struck me.
While I can’t predict every aspect of the world ahead, there’s one forecast I feel confident in. According to the Employee Benefit Research Institute (EBRI), only 3% of private sector employees participate in pension programs. This leaves a staggering 97% who must rely on savings accounts like IRAs and 401(k)s for retirement.
With government employees still benefiting from robust pension plans, I foresee that by the time Braidyn and Brock reach my age, tax revolts may put an end to such guaranteed-income pensions. This suggests that their world might share surprising similarities with that of my great-grandmother’s era.
A Clear Generation Divide
For my great-grandmother’s generation, retiring meant learning to live within their means and saving diligently. Even wealthy individuals had to carefully manage their finances to avoid poverty. Social Security, as we know it today, simply didn’t exist in their formative years.
My grandmother endured the Great Depression, which instilled in her a profound distrust of banks. As a child, I recall her stashing money in a coffee can in the pantry and under her underwear in the dresser. It took years for her to feel secure enough to place funds in a bank account. Despite not coming from a wealthy background, she saved $20,000—an amount equivalent to the price of a house at that time.
With these two women in mind, I revisited the insights from the 2013 EBRI Confidence Survey, which unveils some startling truths:
- The percentage of workers confident in their ability to retire comfortably has remained stagnant, reflecting record lows from 2011.
- Low retirement confidence may stem from workers becoming aware of how much they truly need to save for a comfortable future. One-third believe they only need to save 20% or less of their total income, while nearly a quarter think they need to set aside 30% or more.
Despite government incentives to save through IRAs and 401(k)s, no one is obligating people to live within their means and save wisely. More individuals should view saving for retirement as a priority. Social Security won’t suffice. The EBRI also highlighted that:
- Among eligible workers, 82% participate in employer-sponsored retirement savings plans like 401(k)s; another 8% have funds in these plans but aren’t contributing currently.
- Cost of living and everyday expenses are cited as the top reasons individuals do not contribute more to their employer’s plan, with 41% mentioning these factors.
Only 10% of workers are contributing the maximum allowed to their plans. Reflecting on this, it’s disheartening that many aren’t taking full advantage of a tax-deferred savings opportunity. If you’re in the 25% tax bracket, saving $10,000 could yield a $2,500 tax reduction—yet only 10% of those eligible are utilizing this benefit?
Statistics like these strongly emphasize my hope for the lessons I wish to pass on to my grandchildren—lessons that aren’t likely to be learned through school or an iPad:
- The importance of saving money, allowing for the power of compound interest to build wealth.
- The value of living debt-free and staying within one’s financial means.
- The timeless truth that government promises can’t always be relied on.
- The understanding that the best investment one can make is in oneself.
Our grandchildren must learn how to generate wealth and let it flourish. This financial security will provide them with more meaningful life choices in the future, such as not having to stay in a job they dislike. These essential lessons in values and discipline are often not adequately taught beyond the home, making it our responsibility as grandparents and parents to impart this wisdom.
Sincerely,
Dennis Miller
for Economic Prism
[Editor’s Note: A friend of mine annually gifted his children shares in reputable US companies. Each year, he would explain the growth of their investments and dividends. Today, his children in their 40s still possess some of that stock, illustrating the value of financial literacy. I encourage you to share this article with your children and grandchildren; they will appreciate your effort in the long run. For further insights into investing that can benefit the next generation, consider reading our special reports or exploring a risk-free subscription to Money Forever. Our ongoing work includes a series of valuable reports on crucial retirement topics like financial advisors, reverse mortgages, income-producing stocks, and low-fee ETFs. You can access these reports individually or, for a comprehensive financial education, start your Money Forever premium subscription now to enjoy all our reports, current issues, and archival content.]
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