Karaoke & My Grandparents’ Simple Success Formula

October 21, 2011

Last night, after going out to dinner with my girlfriend, I did something I thought I’d never, not in a million years, ever do.  I got up in front of an audience and sang at a Karaoke Night!  This may not be noteworthy for many people, but for me it is.  You see, when I sing most of the dogs in the neighborhood start to howl, glass starts to shatter, and anyone within earshot either starts to bleed from the eardrums or shouts, “Stop, PLEASE!!!!!”  I’ll never be confused with the next American Idol.  But, I got up and did my best to make everyone else look exceptionally talented.  But, that’s not the point.

What was notable, and NO it wasn’t my voice, was the way the crowd interacted with each other.  It was a very diverse crowd.  The age range was from early 20’s through, I’m guessing, early 70’s.  And watching the reactions of the each generation as they listened to a different generation was quite the sociological study.  As the younger singers were singing a rock song or a hip-hop song, the older generation would generally wince and appear to be in pain.  As the older singers would do a Sinatra classic (or Tony Bennett), the younger audience members would roll their eyes or laugh at “how lame” the song choice was.  We were positioned in between a large group of 20-something’s and a large group of people talking about their thoughts on how Social Security reform shouldn’t impact the level of benefits that they are currently receiving.  It was, in my opinion, the best seat in the house.  All of this got me thinking about the differences in the retirement picture for the groups in the audience.  Here are a few of the differences that I observed:

• The group receiving Social Security has a relatively certain level of benefits.  The 20-something’s may have an entirely different kind of plan when they are ready to retire.  Benefits may be smaller.  Start ages may be later.  They may have ownership in their benefits.
• The retirees, and being a little bit social, and a whole lot curious, I asked a few questions of the group, almost unanimously had significant pension incomes.  The young group will almost certainly have no one with a significant pension during retirement.
• The retirees have a combination of Medicare, a retiree health plan from their employer, or a military plan (Tri-Care).   The younger group, I talked to a few of them while we were looking through the song book, had a few uninsured members, a few with a low-cost high-deductible plan, along with an HSA, and a few with a more traditional PPO/HMO kind of plan.  It’s amazing how much you can learn about a group of people with a simple, “Hey I’m writing a blog and want to know about your health insurance.”   I got way more info than I ever wanted about the group and the medical history of one of the guys in the group!

What does all of this mean?  The younger generation is going to have to take a much more “do it yourself” approach to retirement.  Pensions are going the way of the typewriter.  Medical insurance is a sea of uncertainty.  Social Security is funded by the mythical “trust fund” and is by no means something that should be counted on if you are less than 50 years old.  So, if you are not going to have a pension, retiree medical and generous Social Security benefits, what can you do?

• You could look at the situation as hopeless and give up.  I don’t advocate that position!
• You could accept my view as a strong possibility and decide to take charge of your retirement picture.  I’ll tell you what my grandparents told me a very long time ago.  “Success is easy.  Success lies in the fundamentals, so stick to the basics and don’t get too complicated!”

o Know where your money goes.

o Spend less than you make.

o Get out of debt as quickly as possible.  Stay that way.

o Pay off your mortgage and you’ll always have a place to live.  A house is a place to live, not an investment.

o Save and invest as much as you possibly can.

o Don’t take on too much investment risk.  But, don’t take on too little.

o Set goals.  Track your progress.  Make changes in your financial behavior if needed.

By listening to my grandparents, you can not only retire with the same level of security as current retirees, but when you do you’ll be able to look back with the satisfaction of having done it yourself!