My wife Jo and I spent Mother's Day weekend at our daughter Holly's house, enjoying time with our two young grandchildren, three-year-old Brock and eight-year-old Braidyn. With two young boys, the house can get pretty loud. Not only do they run and shout like all little boys, the noisy games they play on my iPad also cause quite a racket. My wife grins when she sees me reach up and turn my hearing aids off… Ah! Relief from the noise.

When I was Braidyn's age, my great-grandmother was still alive. She would sit on her front porch swing with her walker set to the side, and we would snap peas and shuck lima beans together. I remember her telling me her childhood memories about life after the Civil War. As I watched my young grandsons, I thought to myself: I wonder if my great-grandmother, who was born in 1860, or my grandmother, who was born 1890, ever looked at me and wondered what the world would be like when I got to their age.

As I watched Brock play games on my iPad, I was not only amazed, but I also struggled to imagine what his world would be like 70 years from now, when he will be the age I am today. Will he and his brother still be working? Will they be able to retire? How long can they expect to live?

When I mentioned to my daughter Holly how amazing it is to watch a three-year-old navigate an iPad, she reminded me of how I teased her when she was in grade school, saying that all the kids getting off the bus looked like midget paratroopers with their backpacks full of schoolbooks. She told me that middle-school students now receive iPads from the schools. All their books are downloaded, and they take all their tests on the iPads. She also lamented the fact that they are not learning how to write or communicate to her satisfaction.

Preparing for an Unknown World

And then, like any loving grandparent, my thoughts took a turn: How can I help prepare my grandchildren for a world I am unable to imagine? Once the answer hit me, it seemed alarmingly obvious.

While I cannot imagine every detail about the state of the world in 70 years, I am willing to offer one prediction. According to the Employee Benefit Research Institute (EBRI), only 3% of employees in the private sector have a pension program. Basically, the other 97% of folks in the private sector have to save for retirement through elective, tax-deferred savings accounts like IRAs and 401(k)s.

So, while government employees still have generous pensions, I predict that by the time Braidyn and Brock reach my age, a tax revolt will mean that those guaranteed-income pensions no longer exist. From that perspective, the world my great-grandmother lived in and the one my grandchildren will live in may someday have something in common.

One Big Generation Gap

If folks of my great-grandmother's generation wanted to even think about retiring, they had to learn to live within their means and save their money. Even people with significant amounts of inherited wealth had to pace their spending if they didn't want to die as paupers. There was simply no such thing as Social Security, nor anything like it, when they were growing up.

My grandmother lived through the Great Depression, and she never trusted banks – for good reason. As a youngster, I knew that what money she had was hidden in a coffee can in the pantry and under the underwear in her dresser drawer. It was many years before she could bring herself to put money in a bank account. We were not a wealthy family, but my grandmother had managed to save $20,000. That might not sound like much now, but at the time that was about the price of a house.

So, with these two women in mind, I reread the 2013 EBRI Confidence Survey, which offers up some real eye-openers:

  • The percentage of workers confident about having enough money for a comfortable retirement is essentially unchanged from the record lows observed in 2011.
  • One reason that retirement confidence has remained low may be that some workers are realizing just how much they may need to save each year in order to live comfortably during retirement. One-third think they need to save 20% or less of their total household income, one-fifth put that target at 20%-29%, and nearly one quarter report that they need to save 30% or more.

While the government offers some tax incentives to save through IRAs and 401(k)s, no one is forcing people to live within their means and save their money. In other words, saving for retirement is an option that more people should be taking. Social Security is not going to get the job done. The EBRI had some comments on that subject, too:

  • One of the primary vehicles that workers use to save for retirement is an employer-sponsored retirement savings plan, such as a 401(k). Eighty-two percent of eligible workers (38% of all workers) say they participate in such a plan with their current employer, and another 8% of eligible workers report they have money in such a plan, although they are not currently contributing.
  • Cost of living and day-to-day expenses head the list of reasons why workers do not contribute (or contribute more) to their employer's plan, with 41% of eligible workers citing these factors.

The report went on to say that only 10% of those working are contributing the legal maximum to their plan. Excuse me! The government is giving us a tax-deferred opportunity to save money here. If you are in the 25% tax bracket, you would save $2,500 on taxes for every $10,000 you save, and only 10% of those eligible are taking full advantage of this?

When I read statistics like that, it really drives home what I hope my legacy for my grandchildren will be… lessons not likely to learned in school or off an iPad:

  • The virtues of saving, allowing interest to compound, and accumulating wealth.
  • The value of staying out of debt and living within your means.
  • The timeworn truth that they cannot trust the government to keep its promises.
  • The knowledge that the safest investment they can make is in themselves.

Our grandchildren need to learn how to accumulate capital and make it grow. Then, someday, that money will give them many more cool life choices, like not having to work, particularly in a job they may not like. These are lessons on values and discipline that are unlikely to be taught satisfactorily outside of the home. As grandparents and parents, we must continue to remind ourselves that teaching these lessons is our job.

I have a friend who, every year, gave his children a gift of common stock in a well-known US company. Each year he would sit down with them and explain how much they had earned in dividends, and how the stock had appreciated. His children are now in their 40s, and still own some of that stock today. This friend sure had the right idea.

As long as I am on a roll, I frequently hear educators complain that children never get enough exercise. I say dump the iPads, load their backpacks full of books again, and call it weight lifting.

On the Lighter Side

For all of our readers who are fans of talk radio, I'd like to share a tidbit about my recent experience on Phil's Gang, a nationally syndicated radio show and a longtime source of trusted financial information. In addition to discussing why I wrote my book Retirement Reboot, we also chatted about a topic covered in this month's issue of Money Forever (released on Tuesday): fees.

Your broker might tell you his fees are only one percent – which sounds low – but over time that can add up to a lot of money, particularly if you're also paying mutual fund management fees. If you can get the same performance from a lower cost ETF, why pay your broker or the manager of a mutual fund when you can pay yourself? It's something every investor should pay attention to.

If you want to listen to our chat, go to Phil’s archived shows and select the second hour of his Wednesday, May 15 show. I will be back on Phil's Gang soon to discuss my book in more detail.

If you would like to check out some of the best ETFs for minimizing unnecessary fees in your portfolio, I urge you to read the complete May issue of Money Forever today. If you are not already a subscriber, you can access the issue by taking advantage of our 90-day, no-risk trial subscription.


We finally had some good baseball weather in Chicago. The Cubs played the Mets in a weekend series and outscored them 13-9… but they also lost two games by one run. A Cubs fan knows the meaning of “snatching defeat from the jaws of victory,” as they blew the lead in the late innings of both losing games. Of course, those were the two games Jo and I attended. I hope we don't get banned from the ballpark for being a bad omen.

This is my 69th year of going to watch the Cubs at Wrigley Field. It was a beautiful Sunday afternoon, and I found myself thinking back to the dozens of times I came on weekends as a young boy. There was a father with two young sons seated in front of us, having a wonderful time. Those children will remember the time with Dad and quickly forget the final score. Kids know what really matters.

And finally…

Subscriber Chip S. sent me an interesting quotation:

  • Give a man a fish and he will eat for a day. Teach him to fish and he will sit in a boat and drink beer all day.

Also, the question, “What does love mean?” was posed to a group of 4-8 year olds. Here's what they had to say:

  • Love is when you go out to eat and give somebody most of your French fries without making them give you any of theirs.
  • Love is when you tell a guy you like his shirt, and then he wears it every day.
  • Love is when Mommy gives Daddy the best piece of chicken.
  • When my grandmother got arthritis, she couldn't bend over and paint her toenails anymore. So my grandfather does it for her all the time, even when his hands got arthritis too. That's love.

I'm going to add one of my own.

  • Love is when you leave for boot camp right out of high school and you get a letter from your girlfriend every single day at mail call. To this day I am forever grateful.

Until next week…