Hientropy: What does it mean?

The title of this blog is not a real word, but instead a term coined by a friend of mine in high school which also acted as the name of our rock band. Its really two words combined, High and Entropy, thus Hientropy. We all know what the word High means, but what does Entropy mean? Entropy has a few meanings but here is the meaning that pertains to this blog and my thought process: A doctrine of inevitable social decline and degeneration. In essence, things tend to break down and decay as time goes on. What does that have to do with this blog? My intent in starting this was to sound the alarm, wake people up (primarily young people) and get people prepared for the future that is unfolding before us. I believe that perhaps for the first time the past seems brighter than the future.

 I'm 26 years old and frankly I feel like my generation is getting handed a diminished future. For instance, I have yet to see a projection of social security or medicare that isn't woefully insolvent by the time I'm in my mid-40s. Yet with each paycheck I fund programs that I know won't be there when I am retiring. Those in power today are writing checks and making promises that my generation will be burdened to keep.

While I'm pessimistic about the future I am not all doom and gloom. American's need to wake up and start paying closer attention. People need to start taking responsibility for their own well being, and plan for their futures. I won't be one of these people telling you to start building a bomb shelter in your backyard, and start stocking up on ammunition, but I will be telling you to save money, reduce debt, invest wisely, and live within your means. No one other than ourselves can be held responsible for what we make of our future, whatever that future may be. You only need look at Greece to see what can happen when people leave their future in someone else's hands.

Disturbing Trends

So I came across a very interesting study done by Wells Fargo back in 2010 about retirement planning and savings. I will include a link below to the study and recommend you take a look at it. The main idea that I gleaned from the study was the fact that Americans don't have a clue about retirement planning. I would go even so far as to call them delusional and irresponsible. The study really did show some alarming trends, especially when it came to my age bracket, the 20-somethings.

First and foremost the study shows a lack of planning, 71% didn't have a plan for their life expectancy and how long their retirement savings needed to last! Those in the 20-something bracket showed an expected lack of interest in retirement planning all together. This frankly didn't surprise me at all based off conversations I have had with friends and others in my generation. (Your whole life is in front of you, why starting worrying about all that now?) I was relieved though to find that a majority of 20-somethings do not think social security would be much help by the time they reach retirement age. So at least we are not completely delusional. The study also showed that my generation has a diminished view of investing in the market. When asked what they would do if given $5,000 for retirement, most said they would put it in the bank, or a CD. Wells Fargo aptly points out that at the rate CDs, and savings accounts pay out in interest it would be pretty much impossible to keep up with inflation and grow that money enough to support a healthy retirement.

Secondly, I took from the study the idea that many Americans do not understand how much is needed to retire with the standard of living they expect to enjoy in retirement. They simply are unaware of how much they need to save and grow that money to retire, and how much to withdraw when they finally do enter retirement. Health care is of course extremely expensive, especially as you get older. The average amount 20-somethings expect to pay for health care in retirement: $87,400. Wells Fargo cited a recent study that concluded that a 65-year-old couple retiring in 2010 would need about $200,000 for out of pocket medical expenses in retirement. That is a huge difference, $112,600 to be exact! After reading all of this I am left with the impression that perhaps classes in financial planning and retirement should be taught in high schools and/or made requirements for college degrees. You don't have to understand everything but should at least understand the basics! When and If Social Security and Medicare is bled dry what are people going to do?

Like I said earlier, check out this study, its a quick read. I focused more on the 20-somethings because that's my group but they have it broken out for everyone. Take a look at your age group and see where you stand in comparison. The saddest statistic in the study: The median retirement savings of respondents age 50 to 59...$29,000. 


https://www.wellsfargo.com/downloads/.../2010-retirement-study.pdf

Starting a Blog

Well this will be my first post on this blog, my first post on any blog actually. As you can see this is still a work in progress and will be improved upon in the future! So there are a few reasons why I decided to start this blog, one being inspiration. I have come across a few other financial blogs giving advice, tracking their financial progress, and inspired me to do the same, from my own point of view and stage of life. Another reason is my own desire to put my ideas out there, have people read them, critique them, and make them better. My generation will be facing some big challenges as we grow older, will we be prepared to meet them?

A brief history on myself, I am a 26 year old college student, already working in my career field of choice full-time. I just recently bought my first house, and am slowly learning the ropes of being a homeowner! I have dabbled in the stock market for a few years but not with any serious amount of money. With this blog I hope to track my own growth in both knowledge and wealth, as well as give others reading this blog ideas about what can be done, and more importantly what NOT to do! My goal is to learn something new and hopefully you will too.