Why teach your kids about money and the reason I wrote books for my kids.
The financial future is bleak - for us currently that is, things may improve in thr far far future for our small children or grandchildren. But teaching them about how money works, what the importance of how to manage money - they need to learn today so they can be prepared should a crisis ever arise again.
The current situation
Who says there's no inflation? Food prices are expected to rise as much as 4% this year, according to Kiplinger's Personal Finance magazine, meaning household budgets will be eating the difference.
That is faster than 2012's food inflation rate, driven higher by the rising cost of beef, pork, chicken, fruits and other staples.
Higher cost of food (the basics) and growing older population
The oldest baby boomers have already turned 65, and the older population of the U.S. is beginning to swell. The age-65-and-older population grew 18% between 2000 and 2011 to 41.4 million senior citizens, according to a recent Administration on Aging report.
These numbers are expected to further balloon over the coming decade as baby boomers continue to reach traditional retirement age. Here's what retirement looks like for the typical person age 65 or older in the U.S.:
Most retirees have very modest incomes. The median income for people age 65 and older was $27,707 for males and $15,362 for females in 2011. The typical household headed by someone age 65 or older had a median income of $48,538. The median income increased by 2% between 2010 and 2011 after adjusting for inflation. Almost 3.6 million elderly people (8.7%) lived below the poverty level in 2011.
Reliance on Social Security
The most common source of retirement income is Social Security, and 86% of people age 65 and older receive monthly payments. Social Security is responsible for 90% or more of the income received by 36% of beneficiaries.
Only about half (52%) of retirees receive income from their assets. Even fewer retirees receive monthly payments from private (27%) or government (15%) pensions. "The boomers will be the first generation to overwhelmingly not receive some sort of guaranteed benefits from employers," says Ken Dychtwald, president of the consulting firm Age Wave and author of A New Purpose: Redefining Money, Family, Work, Retirement, and Success.
"We now live in a 401(k) world where people are responsible for our own savings, and baby boomers have not done a very good job. It's a generation that is going to struggle in old age in the absence of reliable anchors and support systems."