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Young People and Retirement Planning
By JLP | March 14, 2006
Sandra Block at USA Today recently wrote an article about how Few Young Workers Take Heed of Need to Start Saving Now. It proves that as a society, we have got to do a better job of teaching young people the virtues of personal financial planning. I think it would be cool for colleges to REQUIRE a personal finance class for ALL seniors. I’m almost certain that most college graduates have little comprehension of financial planning. Such classes might help prevent graduates from making the same mistakes that so many other people seem to make. What are your thoughts?
Topics: Basics, Financial Planning | 7 Comments »
March 14th, 2006 at 2:58 pm
I agree with the author of the article. I know that for us, it would have been great to see the power of compounding interest begin a little earlier.
I like your idea of the require coarse in college, but would even like to see it as a required course in high school! Get the kids at a young age, plus hep those that might need it the most, those that either don’t attend college or don’t finish a degree!
March 14th, 2006 at 3:07 pm
I also think that personal finance should be a required HIGH SCHOOL senior course. I was lucky that my mother worked in banking and taught me how to handle credit responsibly, manage my checking account, live within my means and save and invest for retirement early on in life.
What I saw when I went to college and later enlisted in the US Army was a large percentage of 18 year olds who had never even had their own savings accounts before. In 4 years of military service, I don’t think I managed to convince even one fellow soldier under the age of 30 to start up an IRA.
March 14th, 2006 at 4:22 pm
I agree with the need for financial planning education for HS and coolege student. But you are still fighting an uphill battle. You can talk to their heads about saving and the “miracle” of compound interest. And they will understand it and agree with you. In the meantime, their hearts are being indundated with adverts for the good life, 24/7. Their heads will say “I need to save for retirement.” but their hearts will answer “But I need that widescreen plasma.” Who do you think will win the argument?
March 14th, 2006 at 4:36 pm
Personal finance should definitely be taught in high school, but with respect to the title of your post, I agree that “retirement” planning is probably more appropriate at the college level. Not just for seniors because some students are eager to learn and may be ready before that 4th year, so it should be a graduation requirement…period.
On the flip side, I’m afraid that some people are obsessive about retirement and forget to live for today. It’ll be a shame if you worked and saved all your life but don’ot live long enough to see the fruits of your labor.
There needs to be a balance and basic finance education should start at home.
March 14th, 2006 at 5:25 pm
It is unbelievable how many people do not participate at least to the company match. My company pays $2.50 for every dollar up to 6%, I would be crazy not to invest. As a twenty something, almost thirty something, I agree that the current “pop” culture has everything to do with overspending. Just watch MTV every other video is about rappers driving Escalades, and wearing diamond necklaces. These images send the message that if you don’t own these things you are not normal. As for me I prefer to be abnormal and rich:)
March 14th, 2006 at 9:36 pm
I totally agree that educational institutions need to incorporate a better personal financial education model. High school seniors and College Seniors need to take a 1 credit course about personal finance. All they need is the basics…simple long-term investing, creating a budget, how to buy a house, Insurance, etc.
March 15th, 2006 at 12:03 pm
I am 26 years old, have been in the workforce for 5 years, and have maintained an IRA + 401(k) since year 2, despite having held 4 jobs during that time.
While I do agree with the author, and the general sentiment that education about financial planning is critical – I don’t entirely agree that a lack of education is the principal reason that young people don’t save for retirement.
I’ll cite this article recently published on MSN – http://www.msnbc.msn.com/id/11238227/
With the income to expenditure gap expanding for today’s entry-level workforce, it has become increasingly hard to gain a solid foothold on finances – and it’s been my experience that even strict and thrifty spending habits leave little room to ‘manage’ finances. I’ve done the best I can – but I’ve been lucky enough to move quickly from job to job when required. I’ve been even luckier that each job switch has brought a decent raise in income. Even still, it’s been virtually impossible for me to build short term savings + long term savings + retirement savings while day to day living costs continue to rise.
When young people have to spend the first 6-8 years of being in the workforce struggling to make ends meet, it’s no wonder that retirement savings aren’t high on the priority list for most.