Ben’s basic message is that “while almost everyone I know went to college, very few learned how to actually work — i.e., how to give an honest day’s labor for a paycheck.”Continue Reading...
Archives For Generation X
Though the vast majority of eligible baby boomers participate in their 401(k)s, less than a third of workers 25 and under are contributing to these employer sponsored retirement plans. Even worse, only 4% of young workers are maxing out their workplace retirement plans, according to a recent survey by the tax information service CCH.
Ironically, these accounts are more important to young workers than to older Americans. That’s because the majority of younger workers aren’t covered by an old-fashioned guaranteed pension. Moreover, every dollar that 20-somethings save will be more valuable over the course of their lives than the same dollar will be for older workers. That’s because young workers have more time to invest their savings and then let that money grow, tax-deferred.
This table from Hewitt and Associates is both telling and disappointing on ALL levels:
Holy cow! Even those who are older than 42 only have an average balance of $93,000, while the median balance is just $44,000. By that age, the average balance should be $250,000 or more.
The question that comes to mind with all of this is:
I have a few ideas:
1. Start teaching and preaching about and personal finance early in life. Personal finance know-how is very important because it won’t do any good for young people to understand the need for retirement planning if they are drowning in credit card debt.
2. Make sure people understand the numbers when it comes to retirement planning. Stuff like how much it is going to cost, and how much is going to need to be saved in order to realistically reach that goal.
3. Automatic enrollment into target funds. I know this sounds anti-free choice, but I almost think we should make retirement savings MANDATORY kind of like social security is. I also think that if we went this route, we could possibly reduce the amount that goes into social security.
Those are a few that I can think of off the top of my head. I realize that number 3 is controversial.
What do you guys think?
If you are a member of Generation X, you’re parents are most likely Baby Boomers. Although most Baby Boomers are not financially prepared for retirement a lot of them do at least have some sort of inheritance to look forward to. Chances are, if the Boomers do inherit assets from their parents, they will spend them all supporting (and indulging) themselves in retirement, which will leave very little for Generation X to inherit. Therefore, if there was ever a generation that needs to get active in planning for the financial future, it is Generation X. Fortunately, most of us have time on our side.