For college-educated workers, earnings at age 25 are typically only 42% of their peak earnings, and in this case, "saving for retirement when income is temporarily low could be suboptimal." (Photo: Shutterstock)
Conventional wisdom has always said that young people should start saving for retirement early in their careers. That may be the wrong approach for some workers, according to a new report from the National Bureau of Economic Research.
Researchers suggest that because life is uncertain, sacrificing now for a presumed better life decades in the future may not always be the best strategy. The report uses a lifecycle model based on a millennial born in 1995 who begins work at age 25 and retires at age 67. It assumes a 27% in federal and state tax rate, 2% inflation and standard Social Security benefits. It also looks at the effects of an employer 401(k) match of 50% on up to 6% of wages.
Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.
Your access to unlimited BenefitsPRO content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking benefits news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
