DEAR MR. BERKO: In 1992, the Jonesboro Sun invited you to speak to its readers. And so did Arkansas State because I remember my dismay when you were introduced to our classroom, and several other classes, too. My classmates and I didn’t want to listen to some old guy talk about the stock market. You should have heard the students grumble, but none of us had the guts to leave the room. And I’m glad I didn’t. Because of your comments, my husband and I own a successful insurance agency in Indianapolis (I read your column here, too) and I owe my success to you. You gave our class some numbers, telling us that when we retire at 65 only one of us would be financially successful. But the way you explained the numbers scarred me. We have two kids both of which are entering Indiana University next year. We’d like to give them the same numbers you gave at Arkansas State about failure and success. – SA, Indianapolis
DEAR SA: Holy Moses, Mary and Methuselah that was so long ago, the Bible on my hotel room bed stand was a first edition. I remember the class, but I didn’t hear the grumbles. Though when I entered the room, the looks on some faces were hard enough to scare rust off an old car bumper. Here’s a truncated version, and you’ll have to fill in the commentary.
There were 68 students in your class, and I said that in 45 years (2037), when most of you reach 65, some 16 of you won’t make it. You’ll be either dead or in jail. “Go ahead and look around because you may be one of the jailed.” That got their attention! Therefore, 52 of you will compete for the “dwindling assets” of the economy and “94.2 percent of you will fail egregiously!” That got the class’s attention, too.
1. By 2037, when you reach 65, some 18 of you will be living in penury and “won’t have a pot to cook in.” You’ve been unemployed for years and don’t care. You’ll be dependent on federal and state welfare programs for housing assistance, food stamps and pity from family and friends. You accept it.
2. At age 65, some 25 of you will be considered precariat retirees. You will need government help, many of you will try to work part time. You will need government subsidies for food, housing and utility bills. Your retirement years will be gray, empty and penniless. You won’t have a pension, and your minimal Social Security benefits will cover about 45 percent of your living costs. You will scratch for pennies and nickels, and be dependent on food stamps. You’re family will reluctantly provide you with handouts. Retirement will be tough and your winters will be cold.
3. Five of you will end up as lower-middle class retirees with barely enough income covering your needs. Your pension and Social Security won’t be sufficient. You’ll have to be miserly with your loose change, and you’ll often be late with mortgage, credit card, insurance and utility payments. You’ll need food stamps and housing assistance. Your retirement will be rough around the edges.
4. Only four of you will have the resolve to retire in middle-class comfort. Pensions, Social Security and savings are just enough to cover your activities. You’ll be watching your dollars, but you’ll dine out occasionally at Olive Garden and take church-sponsored vacations. However, repair bills like a new roof or replacing an A/C could be impossible.
5. Only one of you will have the drive and commitment to retire in a pleasant upper-middle class comfort with enough income to enjoy retirement with your family, new cars or life’s better amenities.
6. Please note that only 0.91 percent of a given population number will have the skill sets and ambition to retire wealthy. So we must have a class size of 110 to produce that one highly successful student. But in your class of 68 students, 94.2 percent of you will be financial failures. However you, SA, are that wonderful anomaly and I’m glad my comments opened your eyes.
Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at firstname.lastname@example.org.