Are the Younger Worse at Saving Their Money?
I remember I had talked about this a while back, the phenomena that really isn’t too surprising these days given the “me” and immediate gratification sentiments that seems to run rampant in both my generation (I’m in my early thirties), and the generation after me, which would put that somewhere in the twenties. When I was in my twenties, it was the worst time for spending wildly with money I certainly didn’t have, and it’s the reason that I got in way over my head with credit card debt thanks to putting everything from car repairs to mine and my college room mate’s new stereo system on my trusty credit card.
It didn’t take long before my naturally somewhat thrifty and shrewd spirit kicked in and I realized that although I was waiting tables almost full time to support paying the rent and food and other necessities, I was still spending way beyond my means, and using plastic to boot when I couldn’t afford to pay for things, whether they were necessities or not. Never mind the fact that I never had a red cent to put away, invest or save, I was just trying to make ends meet and have fun as a college student to worry about starting to save. I thought, jeez, I’m so young, I don’t need to start savings until I’m in my thirties or forties and I’ll be fine for retirement!
Little did I know how badly I was shooting myself in the foot back then, since compound interest, that glorious concept that multiplies money a gazillion times the longer money stays invested in interest yielding instruments, takes time to build and the younger you start, the more likely you are to be at that ideal million dollars for retirement – or more.
Well, it seems that these days the sentiment hasn’t really changed among those that are considered “young”, and they still have somewhat of a handicap when it comes to saving their money or even spending it wisely to begin with for that matter. One large company that handles 401k retirement accounts for many large companies says that it sees the majority of younger people cash out their 401k accounts when they switch jobs instead of rolling it over, which is the wiser thing to do so you don’t miss out on that compound interest or end up spending that money on things that’ll be gone in five to ten years, leaving you with nothing for the golden years.
Because they say that “Generation X” people tend to have this sort of mentality when it comes to their retirement money, it could definitely show that there is an impending savings crisis that may manifest when genx-ers reach retirement age in the next thirty years or so. Many Generation x’ers say that they recognize that saving for retirement is important but they have so many other impending obligations they have to save their money for that they end up paying those before they “pay themselves” so to speak through their retirement savings plans.
