The American Institute of CPAs held a press briefing this week to announce its plan to marshal its members in an ambitious quest to improve the financial literacy of the American public.
In making the case for its 340,000 members to get involved with the 360 Degrees of Financial Literacy program, institute leaders offered up some pretty compelling statistics demonstrating our country's dire need for financial education.
Last year, a record 1.6 million Americans filed for bankruptcy -- and almost a third of them were women filing alone. The average American family spends $1.22 for every dollar it earns. One in five American families with annual household income of less than $50,000 is spending 40 percent of after-tax income to pay down debt.
A poll conducted by Roper for the AICPA found that only 27 percent of more than 1,000 people surveyed are "very confident" they know enough about saving and financial planning to ensure a secure retirement for at least 25 years after they stop working.
Point taken -- people need help. And, as AICPA chairman Jim Castellano pointed out, CPAs are in a good position to help. And many of them already are -- in several states, CPAs are actively volunteering in financial literacy campaigns in their communities.
But what was even scarier than the numbers showing just how much help the public needs were the figures presented by another CPA who attended the press conference -- Comptroller General David M. Walker. Walker offered some startling statistics on our government's financial situation. While the official U.S. gross debt now stands at around $7 trillion, that number excludes some rather significant items -- like unfounded Social Security and Medicare benefits and veteran's health care. Factor in those and other commitments, and that number soars to more than $42 trillion. That's more than $140,000 per person, or 18 times the current federal budget. Walker also noted that the number of workers paying into Social Security -- which stood at more than 16 for every person drawing benefits in 1950 -- will dwindle to two workers for every retiree by 2040. And, according to Walker, the government isn't doing much better than the people spending $1.22 for every dollar they earn. The government spends $1.20 for every dollar it receives. As he put, "We’re not leading by example."
It looks like the average consumer isn't the only one in denial about their financial future.
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