Am I too young to plan for retirement? Why saving up for retirement is crucial.

Are younger people in the US saving less for their retirement when compared to older generations? What does this mean for younger generations and what can we do to prepare young people for retirement? 

Startling statistics on savings

Young people, Millennials and GenZs, seem to be taking a different approach to retirement, and statistics show that. 

In a survey about savings, Millennials, who will be retiring about 20 years from now, say that they have no savings for their retirement. 

When US Millennials were asked when they want to retire, they hoped to be able to stop working at 51 to 60 years old, about 5 to 10 years earlier than the current retirement age in the US which is 65 for the majority. 

But will this desire be close to reality especially when taking into savings for retirement is taken into account? 

Surveys say that young people need about $1.6 million for retirement in order to live well, but they have saved only a fraction of this, putting them in a dilemma. 

Improvements in the system

A variety of factors are making saving at this day and age difficult, and they can be addressed on a societal level. 

• More jobs that use different skill sets should be created.
• Jobs that young people can do during school break like summer or spring breaks should be supported. 
• More paid internship opportunities should be created so young people can earn while they are learning a trade. 
• Strengthening the middle class through policies that grant fair wages and benefits should be done. 

So how early should young people be saving and how can they do it? 

Meanwhile, there are things that can be done on the individual level to help young people achieve their retirement plans. 

Finance experts advise us to save about 10% of our take home pay in order to plan and prepare for the future, but young workers under 34 years old are only able to save about 5.5% of what they make. 

This is a bleak scenario, with only 25% or workers saying that they are very confident about their ability to retire comfortably. 

• Calculate how much you need to be able to retire and when you would like to retire. These numbers give you goals to set. Once you are clear how much you need and when you would like to get it, start saving. 
• Start saving little by little, gradually increasing the amount you save as you increase in your confidence and motivation. 
• Does your company now have a retirement savings plan? Most likely it does. Sign up for the plan and save as much as you can through this. The amount you save also earns you compound interest and it does not undergo tax cuts, so over time you save more. 
• Many companies also have pension plans. Get to know the benefits, and how it runs, so you can make wise decisions. 
• Find out where you can learn about investing. Learn the different options, so that you can start putting your money where it has a chance to grow over time. Find an advisor that you trust and who is knowledgeable about matching your financial situation, financial goals, age and your risk appetite to your investments. 

Just like any other area in life, finances, building wealth, and savings are governed by principles. Get to know these principles and start applying them in your daily life at a young age. The age-old principle of sowing and reaping says that the more you sow, the more you will also harvest in the future.  

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