This Valentine's Day, Give Your Loved One The Gift Of Financial Security

According to a recent survey by PEW Charitable Trusts, financial security – both actual and perceived – has garnered increasing attention since the Great Recession, and for good reason.

"Recent research […] underscores how precarious the typical family's situation is: Earnings increased just 2 percent over the past decade; nearly half of Americans regularly experienced substantial fluctuations in income; and 55 percent of households could replace less than a month of their income through liquid savings," PEW explained.

"Combined with this insecurity, consumption, a strong indicator of consumer confidence, dropped in 2013 to levels not seen since 1990. These statistics tell a powerful story about the economic tightrope families are walking, but they leave out an important perspective that of Americans themselves," the study previewed, highlighting the need to understand both the perception and sentiment people hold toward their finances and the actual situation.

The study continued, explicating how the results found Americans are "conflicted" regarding financial well-being. While optimism is higher than it has been in years with 56 percent of respondents indicating they viewed their own situation favorably, 57 percent also indicated that they are "unprepared for a financial emergency, and only half reported feeling financially secure."

While the clear solution is to take off the rose-colored glasses and face reality, acknowledging whether sentiment reflects reality and then working toward a more secure financial situation, in practicality, that is much easier said than done.

However, based upon where you fall on the spectrum of actual security and perceived security, balanced against your age demographic, there are simple steps you can make toward ensuring your perceived and actual situation is on its way to a healthier outlook.

Millennials: It's Not All About Money

For those Americans in their twenties and thirties, it's easy to feel conflicted toward the economy. Having come of age during or right before the Financial Crisis, Millennials as a demographic tend to view the economy differently than older generations. Unlike the Sandwich generation or Retirees, the economic slump in the 2000s is the only point of reference Millennials have. Their entire adult experiences are placed within the framework of a recession and the subsequent struggles that follow economic instability.

According to a compilation of statistics circulated by Forbes, "Even though, as a group, they currently suffer from devastatingly high unemployment they are still upbeat and somehow have enough money to survive. Of course, the fact that one in eight are living back with their parents might have something to do with it." In other words, surviving economically may be viewed differently than surviving economically and independently for the generation as a collective.

The Sandwich Generation: Struggling With Retirement

For those Americans who are snuggly in middle age, or approaching it (those who have or have peers with adult children and aging parents), the predominating concern regarding financial security stems from the lack of adequate retirement savings.

According to Investopedia, "[T]he average baby boomer is about $500,000 short of what they will need to be able to retire comfortably, and this generation will not be able to rely on the security of guaranteed pensions and Social Security that their parents enjoyed.

"The subprime meltdown of 2008 combined with the stock market crash that followed has left many boomers scrambling to piece together an adequate nest egg."

Additionally, Sandwichers face the reality that their years in retirement are likely to extend beyond those of their parents or grandparents; with the longevity of the average American exponentially increasing, it is likely that Sandwichers will live on average significantly longer than their parents did.

Retirees: Making Money Last

For those already in retirement, the key stressor is obviously the concern over whether assets will last the lifetime of the individual. Personal Finance writer Jennie Phipps explained, "This is not your father's retirement. Chances are, Dad left the company with a gold watch, a pension that included health insurance and a Social Security check he could count on. His life expectancy past retirement was fewer than 10 years – so those resources weren't stretched."

"Even if you've planned carefully and your retirement nest egg is hefty, there's always a possibility that you'll outlive – or outspend – your money," Phipps warned.

The important thing to focus on here is not outspending what funds you do have in place. Focusing on adequate budgeting techniques through and through, and working proactively toward extending means as much as possible.

Practical Steps