Undersaved, Overspent and Overfed


Barron's had a quick article about how undersaved we are, citing data from Vanguard where the average 401k balance is $92,148 and the median balance is $22,217. The average is so much higher because it is distorted by some number of very large accounts. There are of course several potential skews in the data but those don't overcome the primary point that we are undersaved. If the median were magically bumped up to twice the median figure, $182,000 would still be too low.

Before you get excited that the market can bail us out by saving more, the NY Times has some ghastly numbers about investors' actual returns versus the returns of the markets and funds that track markets. Citing data from Dalbar, investors' average return from stocks over the last 30 years has been 4.1% annualized versus 10.0% for the S&P 500. Again, there could be several ways to dissect the data for skews but investors underperforming their funds due to behavioral factors is not new. The conclusion from the Times is to not try to out think the market and just go along for the ride.

And finally Peter Dunn looks at the dilemma of lifestyle creep and as well as ways to swim against lifestyle creep by saving more money instead of spending more money.

Anonymous blogger @ketoaurelius (that is his Twitter handle) Tweeted that the carnivore diet can cure various chronic maladies, listed those maladies and "now it's on YOU to take back control."

The thing that ties all of these together is that we have the potential to solve all of these issues/problems by our actions. I say this all the time; we learn as children that we need to save money, live below our means and eat right. The definition of these ideas might change from our initial understanding like the definition of sugar being much broader than were taught as kids but none of this is new.

That makes addressing these problems quite simple as in simple to understand even if not easy to do. In these contexts you might see people talk about the discipline needed to have success in these areas. It's not that I disagree with that word but I think there might be a better way to come at overcoming these problems. Anytime I save money or go to the gym I get the sensation of feeling like I am doing something for my future self. When viewed as a reward, maybe it becomes an easier discipline to take on? I'm not certain but I know it helps make doing these things that can be difficult much easier for me. The psychic value of being at least moderately fit and having a little bit of a financial cushion is immense, more so at 53 than it was at 43 and maybe more so when I am 63 than now at 53.

That will either resonate or it won't but for anyone who is struggling with these things, they need to figure something out for themselves because, paraphrasing Joe Moglia, no one will care more about your health or finances more than you.