An article on NBC.com the other day caught my eye. The piece interviewed several members of Generation X who have been hit hard by the recent economic troubles that many Americans have been facing. The fear among these individuals seemed to be that they would never recover from the hits they've taken due to the economic decline.
While I'm on the cusp of Generation X -- kind of right along the cut off between Generation X and Y -- I've tended to feel much of the pain the people in this article have experienced, still, I haven't lost faith.
Mr. Strom, one of those interviewed for the NBC.com article, pondered how he and his family would come back from a $150,000 drop in their home's value. Well, having been there myself, it's not necessarily easy, but it's possible. First off, since from the article it didn't sound like the Strom family was in the process of selling their home, there is still time for them to recover some of its value over time and continue to build equity. Our family actually took an over $100,000 loss when we sold; however, we tried to look at this in a positive light since it allowed us the opportunity to reinvest in a property in which we might make up for some of our losses.
We try to think of it like selling stock. By selling low, and in turn repurchasing low, we might be able to recoup some of that money over time. And if Mr. Strom is willing to consider downsizing as we did, he could potentially find another positive of his housing situation. We are saving around $1,500 a month in our current, smaller home as compared to the one that we sold at a loss. Over time, this adds up. At $18,000 a year savings, it would take about 7 years in our current location to make up for our initial loss in the housing market.
Again, using Mr. Strom's example, he states that he spends nearly $15,000 to $20,000 a year of his annual $80,000 income in health and medical costs. His daughter has a congenital heart issue that increases their health bills significantly. Like Mr. Strom, our health insurance bills comprise a similar cost-to-earnings ratio. With my wife being a type 1 diabetic, and our premiums having gone up over 36 percent year-over-year, our health-related expenses aren't getting any cheaper either.
To combat these higher costs, we have to look for savings in other areas. Through my working from home and handling the childcare duties in the process, we save over ten thousand dollars each year on childcare costs as well as thousands on additional transportation costs, more than balancing our healthcare expenses. And by keeping entertainment and food costs low as well, we're even able to save a little extra cash occasionally.
Fear of the Future
The NBC.com article goes on to mention that there are fears regarding lack of retirement funding, and as a Gen X/Yer, I tend to agree that this is a legitimate fear of our retirement future. Our family has no pensions, and our retirement accounts aren't well funded since I am self-employed and my wife's employer contributes but a small matching portion to her retirement fund. And with Social Security benefits still distant decades away, such estimated benefits are far from a certainty.
In an effort to combat this future retirement fear, we find that one of our biggest advantages is doing our best to stay debt free and live a lifestyle that is well within our means. While the amounts we save aren't excessive, we feel that managing our lifestyle more than our retirement savings will allow us a more secure retirement. As we watch baby boomers around us attempt to retire with mortgages, student loans for children, and other debt that pushes their income needs higher in retirement, we realize that being able to move into our retirement years with fewer expenses and debt can help reduce our income needs and the strain upon the retirement savings that we do have.
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More From This Contributor:
Linn, Allison. NBC News. "As economy mends, Gen Xers fear they will never catch up". November 16, 2012. http://www.nbcnews.com/business/economywatch/economy-mends-gen-xers-fear-they-will-never-catch-1C7103236?ocid=msnhp&pos=5. November 20, 2012.
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