In October, I had the privilege of interviewing award-winning journalist Gail MarksJarvis (www.GailMarksJarvis.com). Gail’s Chicago Tribune columns reach millions of readers throughout the U.S. Prior to starting her personal finance column, she spent a decade covering business, won one of the nation’s top awards for airline reporting and wrote for publications ranging from USA Today to the St. Paul Pioneer Press. During her 10 years as a personnel finance columnist, Gail heard from thousands of distressed readers about their investing mistakes. As a result, she wrote her book Saving for Retirement without Living like a Pauper or Winning the Lottery (FT Press, February 2007) so that anyone can get firepower out of their savings without laboring over their investments.
Research: Why did you write the book and who is it for?MarksJarvis: The idea came from research that was done by the Financial Planning Association a couple of years ago. The FPA along with the Consumer Federation of America asked Americans if they ever thought they would be able to accumulate $200,000. Seventy-four percent did not think they would ever be able to save that amount. In fact, almost 25 percent honestly believed that they would be more likely to win the lottery. I thought that was just tragic, and it went along with the calls that I had been receiving from readers — people who were trying hard to save but thought it a hopeless endeavor. So I determined to show them, step-by-step, what they can do. I start the book by showing that if a person saved just $20.00 a week, starting with their first job, that they could eventually have a million-dollar portfolio if their money was invested and grew like the stock market has historically grown.
So this book is for everyone?Yes. What I hope to do is to start people from the very beginning and motivate them, showing them that they can do it, giving them hope and then telling them step-by-step what they can do. My dream would be if this book could get in front of everyone — perhaps older teenagers through their 40s. It could help someone in their 50s, too, but it could be extremely valuable to people earlier in their saving years so that they could get themselves on the right track and not make the terrible mistakes that I have seen people making.
I think people do not save enough but I think one of the reasons people end up in such bad shape is because they blow it as investors. So they actually have gone through the pain of saving but then they do not make their savings work for them.
The introduction to my book is about a professor who called me one day. He was in his 40s and had saved about $200,000, all of it in a savings account. I had just written a column where I said that a million dollars in savings would give you perhaps $40,000 to $50,000 a year to live on in retirement, and he was just terrified. He told me he was going to end up eating cat food because he only had $200,000 and it was not growing. He was afraid of mutual funds and did not understand how they worked. This person had even studied quite a bit of economics, and you would think a professor would know what they are doing. But the fact is that almost no one in this country knows what they’re doing. I do not think it is rocket science — I just think you have to explain to people, step-by-step in simple English, what to do.
Chapter 15 in your book is titled, “Do You Need a Financial Adviser?” What high points would you like to share?If I had my way, every American would get professional help from someone who would give solid advice, in a way they could afford. The problem is the average American does not have that kind of money. According to the Congressional Research Service, half of the Americans who are 10 years from retirement have not saved any more than $88,000 and that is often in their 401(k) plan — which is not the kind of investable assets that most financial advisors make their money off of.
Along the way, I have seen terrible mistakes that people have made, when they are this average sort of person with almost no money, who has gone to someone calling him or herself a financial planner. People often confess to me their ignorance; oftentimes they’re widows. And I have seen awful abuse, just awful abuse.