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How Generation Y Suffers from "Lil Wayne Syndrome" When It Comes to Saving Money for Retirement
As studies show Generation Y is behind older generations when it comes to saving money for retirement, www.GoBankingRates.com speculates that it is Gen Y's role models who are contributing to the apathy toward building retirement savings.
"Maybe it’s because our generation’s role models make blowing cash left and right so glamorous," explains Ms. Bond. "I remember when Lil Wayne made headlines over Memorial Day weekend when he and Drake dropped a stack of singles worth $250,000 on 'entertainment.' … it’s no way to build a retirement fund."
She points out that Christine Fahlund, vice president of T. Rowe Price investment services, recently told Reuters that Generation Y needs to save 15 to 20 percent of their annual incomes — starting at age 25 — in order to maintain their same standard of living in retirement.
However, Ms. Bond explains that this goal is easier to reach than some young adults may realize, as the economy is still doing poorly, which means investments are cheap, often undervalued and easier to buy into. Additionally, while workers in their 40s, 50s and even 60s are desperately trying to recoup the retirement savings they lost during the financial crisis, Gen Y has the next several decades to ride out market ups and downs.
How to Get Started
Because most young employees understand the importance of saving for retirement, but not how to implement a savings plan, Bond provides three tips for getting started:
Start small: A lot of numbers get thrown around regarding how much young workers should be putting aside for retirement. Bond advises that those who are intimidated by these guidelines ignore them and simply contribute what feels reasonably, as there will always be the opportunity to increase contributions in the future.
Take advantage of employer matches: Most organizations don’t force employees to go at saving for retirement alone. Workers should ensure they're receiving an employer match — usually a percentage of salary or a percentage of contributions—
Automate: Bond explains that having retirement contributions automatically withdrawn from pay and deposited in a 401(k), IRA or other tax-deferred account will remove the worry over seeing money that can't be spend and make saving psychologically easier.
Click here to see the full op-ed: http://www.gobankingrates.com/
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