Sunday, March 30, 2014

Thinking about the future and retirement when you are young

I’m always a bit surprised by what people respond to on social media sites. I am a rather infrequent commenter myself on social media; it takes a lot to get me to write a pithy response to an online article that I found provocative, timely or interesting. If something strikes me as inherently kind or compassionate, I may write a short note praising the writer for his or her insights and empathy. This past week I read a very short but good article on the Care2 website that dispensed some good advice on how to stop wasting money and to think about the future ( I thought the article was well-written enough to comment on, and this is what I wrote:

Very good tips. If I could emphasize one thing, it would be this. Think about retirement when you are young and starting out in the work world. It's never too soon to start saving your own money toward retirement.

The Care2 community likes to deal out what it calls Green Stars of Appreciation, and I got quite a few for this little comment (notification by email). All well and good. What struck me was that this way of thinking is perhaps not so widespread as you might think. When I worked at different American workplaces in the 1980s, there was always the requisite orientation day that included presentations of 401K plans and IRAs and that sort of thing, so we were in fact briefly introduced to the topic of retirement. But it wasn’t ‘emphasized’ to think ahead, to sock away as much as possible so that you had a good nest egg for when you were older. And when you’re young, you think you’ll be young forever, so you don’t save as much as you should toward retirement. I asked several people, all of whom are middle-aged like me, whether they had been encouraged to save for retirement when they were young and starting out in the work world. The answer was unanimously ‘no’, and that’s true for me as well. Several of those I talked to wished that it had been hammered into them—save for retirement no matter what.

I make it a point to tell the young people I know to save a lot toward retirement when they’re young. Think income, promotions and salary raises. Look out for yourself. I say this to young women especially, but the advice is relevant for young men as well. Why? When you are young, work matters a lot, in fact, identity becomes wrapped up in one’s work. You love your job and you think you will want to work forever. You don’t consider any other possibility. And the world around you is telling you ‘don't play it safe, take risks, live for now’. But mindsets change as we grow older--gradually for some people, abruptly for others, depending upon how you are treated by your workplaces in many cases when you reach middle-age. Suddenly you may find yourself thinking about retiring early in order to pursue a new career, course of study, hobbies, volunteer work—but you don’t have the funds to retire. You don’t have the freedom to change your life. This might not seem like a big deal to some people, but it is a big deal. It is no fun to be stuck in a job or a way of life you are weary of until you are 70 years of age in order to have enough money to retire. I think it might also be smart to tell young people that they don’t have to have the biggest homes, multiple cars, expensive vacations, and all the rest, at the expense of a good retirement account. You don't have to achieve the materialistic dreams that society deems important. Enjoy life, enjoy material pursuits (to a point), pursue your work dreams and goals, but be smart about the future. One day you will retire and you may want to do it sooner than later.   

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