My daughter started her second semester of pre-med last week. She's already freaking out about calculus. I worry about her for a lot of reasons (don't all parents) and one of them is her inability to put away money for the future. Or even think about it. It's nowhere on her radar.
But that's the rap about millennials in 2014. No money to put away. They're living with their parents. How can they worry about saving for retirement when there aren't enough jobs to go around already? With Social Security set to run dry when it's their turn, how does Generation Y even have a chance?
I remember getting a job with Institutional Investor as an associate editor straight out of journalism school when I was 24. The first thing I did – after starting a checking account (I already had a savings account thanks to my parents) – was research mutual funds. Within a month, I had made my first investment, a Dreyfus triple tax-free muni bond fund. I figured it was a good way to get started. The fund served me well, trebling my investment before I cashed out 17 years later and providing me with current income.
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Has the economy changed that much? Duh. Why are newly minted adults bagging the whole idea of saving for the future? I went online to check it out. Among the leading results were articles titled: "Millennials may not be able to afford retirement essentials" and "Why Millennials may never retire." It's one of our top 5 stories this week. It was a bleak Google-scape, for sure.
But how do we help them? Educate them so when they do get a job (they will, right?), they'll know what to do.
But it also occurs to me that we could enhance some of the established protocols of retirement. That's the only thing that makes sense to me – maybe appropriate elements of that generation's and then build retirement tools that use those concepts.
Like mobility. Or as we call it, portability. It makes perfect sense for the wireless generation. It's a product that fits. Why not let this generation – or any other for that matter – stay with one retirement account if they want to for their whole life. Like a phone number. Have it move with them from job to job instead of forcing them to actively roll over the money. It's easier, this portable account. It'll give them one less thing to do in a world filled with more and more have-tos.
Another idea, from another direction, is for parents to mimic companies. If your kid has a part-time job and you've got a few extra dollars in your pocket, how about setting up a fractional match if they tuck it away in a bank. It's a habit they could get into that could get them ready for a 401(k) and serve them a lifetime. If parents add up their contributions at the end of the year and it comes in below $14k, they can simply write it off as a gift.
Anyway, they're just some disparate thoughts – do you have any? – to help our kids get started. Because I'm really glad my kid decided on a career. Yet I really don't want have to spend another year in the office because she needs to save for her third act when she should be living it.
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