The age of financial self-dependence

By Don Kuehn

If nothing else comes from the debate about Social Security reform, one point that should be hitting home with every worker is that the promise of an employer-provided pension and Social Security (for those who participate) is not going to provide enough income to live comfortably in retirement. If you want to maintain the lifestyle you have built for yourself during your working years, you must take responsibility for growing a personal investment portfolio to supplement other sources of income.

Whether private accounts become part of the system or additional incentives similar to IRAs and Roth IRAs--or the proposed new “Roth 401(k)” accounts now awaiting approval (see link at right)—are added outside of Social Security, it’s time to take responsibility for your own future. No matter what your age, no matter what your circumstances, no matter what other financial goals you might have, saving for retirement comes first.

The effort of organizations like the AFT, which oppose private accounts within Social Security, is not based on a belief that ordinary Americans are too stupid to manage their own money. The whole point of Your Money is that everyone can, given a little incentive and some investor education, not only manage but succeed in building even small amounts into a significant nest egg.

Let me repeat a point I've made before: Managing assets for growth will challenge many people, but the future of personal finance is in self-dependence, not reliance on an employer or the government to manage those assets for us.

You may have heard the old saw that the best time to plant a tree is 20 years ago, and the second best time is today. The same is true of investing. Even if you are close to retirement age and have never owned a mutual fund or a stock, it’s not too late to get started (see second link at right).

There are unlimited resources available to help you get a handle on investing. When I “googled” investor education, I came up with more than 9 million sites. Some are subscription and others offer free help. I haven’t looked at all of them, obviously, but here’s a sample:

At www.ici.org/funds/inv, the site of the Investment Company Institute, you’ll find almost every possible subject treated in a comprehensive and effective way. Or go to the Securities and Exchange Commission site at www.sec.gov/investor.shtml to see some good teaching (and learning) tools under “For Teachers and Students.”

If you want help deciding among several funds, check out the Fund Expense Analyzer at http://www.nasd.com/ under the investor information tab.

I have always liked the help center on the home page of http://www.motleyfool.com/ for basic information on all aspects of money management and investing. You might also try http://www.morningstar.com/ under the personal finance tab.

This is the age of self-dependence in financial matters. You are either going to “get it” or condemn yourself to a retirement living below the standard you have come to expect—maybe way below.

So step up. Will you make a few sacrifices now, starting today, or are you going to pay for today’s lifestyle choices for years to come? It’s your money.

Don Kuehn is a retired AFT senior national representative. This column is intended to increase knowledge and awareness of issues of importance to members and retirees. For specific advice relative to your personal situation, consult competent legal, tax or financial counsel. Comments and questions can be sent to dkuehn60@yahoo.com.