3/26/2012 9:54 PM ET|
20-somethings worry about retirement
They believe they'll be on their own to provide for a comfortable old age, but many young adults wish they had access to some advice tailored to their needs.
Getting a car, finding a date and starting a career are common concerns for your average twenty-something.
But today's 20-year-olds, often called Generation Y or the Millennials, are also busy thinking about retirement.
Young American workers are not expecting Social Security or traditional corporate pensions to provide for their retirement. Their parents' lack of retirement readiness is also increasing their awareness -- and acting as a wake-up call.
"My dad would love to retire at 65, but he's putting it off because of the swings in the aviation business. I'm concerned," said JoAnne Farrell, a 29-year-old Web manager at a design firm in San Francisco.
Retirement readiness is decreasing with time. According to a new study by State Street Global Advisors, 2012 is the first year that assets invested in pension plans top those invested in 401k retirement savings plans. At the same time, the study finds that members of Generation X, or people in their late 30s and 40s, are not nearly as prepared for retirement as their older counterparts, the baby boomers.
"Clearly it is the young who have the understanding that 'somebody else isn't worried about this for me. I have to do this,'" said Dallas Salisbury, the CEO of the Employee Benefit Research Institute.
It is up to 20-somethings to fund their own retirements. The trouble is, they're not quite sure how to do it. (Are you saving enough for retirement? Find out with this MSN Money calculator.)
Elena Nikolova, a 23-year-old associate for an energy consultancy in Washington, D.C., has a 401k plan available through her employer, but has not made a contribution yet.
"It's intimidating. First of all, I don't know what to invest in, and I'm not even sure this money is going to grow. I feel like I need to hire somebody to do it for me, which defeats the whole purpose," she said.
Jenny Stein, a 27-year-old senior tax accountant for Ernst & Young, shares similar concerns.
"I have a 401k with Fidelity through work, but it's confusing. People say you need to be aggressive with your asset classes when you're young. I don't know what that means," she said.
Even when employers don't offer 401k plans, young workers are seeking out other investment options. Stein's boyfriend, Matt DeTore, who works for a physical therapy office on Long Island, set up an individual retirement account on his own through a local bank. He's 26 years old. (Use MSN Money's 401k calculator to see if your 401k is likely to provide enough for retirement.)
"After 2008, we've created a generation of people who want to put away for their future," said Kristi Mitchem, the head of global defined contribution at State Street Global Advisors.
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Even if you ignore the type of classes, there is a reason our high school graduates are way behind the graduates in many other countries. Our system is flawed whether you want to recognize it or not. I don't blame the teachers. The government all but forces them to teach to a standardized test or be fired. Unfortunately, life is not a standardized test.
Let's see. Jenny Stein is a TAX ACCOUNTANT and has no clue what 401K aggressive asset allocation means?
Yikes !!! She needs to find another line of work
Well first of all as a baby boomer I want to thank all gen x y for helping in my retirement!!
I'm not collecting yet but will in 5 more years. All I can tell you is live just below your means and save the rest as I have ,no new cars , cheaper house's in fact I paid mine off in 13 years.
Once you do that it feels like a weight has been lifted from you. Then save save save.
I really don't think SS will go under, it will change but some of it will still be there. If it did go under say while I'm alive this country will see a protest that will make the protest's of the 60"s look like a park rally. We can still get out and raise hell !!! Stop worrying about the President and start voting out your senators and congress they are the real policy makers.
Peace OUT !!!!
"I have a 401k with Fidelity through work, but it's confusing. People say you need to be aggressive with your asset classes when you're young. I don't know what that means," ---I can not believe someone that is a senior tax accountant could make such a dumb statement-If this is true she needs to sue the university she went to and ask for a refund-this is basic terms in investing
Oh, boo-hoo for Gen Y. A couple years back 60 Minutes did a segment on these spoiled brats focusing on how they thought they could choose their hours of work and their pay (among other "perks") then came the crash of the economy and they have been bitten in the collective a** by their arrogance.
They should feel fortunate that they are at an age where they can build a nest-egg, unlike many in Gen X (and older) who are putting off retirement altogether. Here's an idea: forgo your BMW, your $300 a month smartphone and your daily Starbuck's coffee. THERE'S YOUR RETIREMENT (easily $6-8K a year in disposable income). Additionally, being frugal for the next 5-7 years means they would also be able to afford a house (now that prices have dropped like a rock) YEARS before their parents ever could at the same age.
Stop whining, pick up a newspaper, read a book on investing and take a risk. Investing in strong, consistent, dividend paying stocks (like AT&T, Coca-Cola, Proctor & Gamble, etc.,...) means you can retire a decade or more before your peers. Living WITHIN your means will be worth more than the overpriced, name-brand crap that is worthless the moment you buy it.
I blame our schooling system though. The government has put out so many requirements so that we get a "well rounded education" that they fail to teach the basics of life. It is critical I take a class in the arts but a class in investing? No, that isn't critical. I have to read books of various types and be able to determine the plot and all that other junk but no need to learn how to setup a budget and long-term planning. Scary stuff.
Mike 487 I agree COMPLETELY with what you said. Another IRONY I would like to point out is that the boomer generation are the biggest HYPOCRITES and SELLOUTS on the face of the planet. These grumpy old boomer farts are the SAME people who were SHOUTING F--K the ESTABLISHMENT back in the 60s/70's.
Perhaps if the boomers had remained idealistic hippies instead of transforming into materialistic yuppies, the world would be a MUCH better place today!!!
I like how the older folks are bashing the Y generation. A large majority of baby boomers are nearing retirement age and many don't have a single dollar saved and are relying on social security to sustain them.
This country has a long standing sense of entitlement that dates well before generation Y. Why plan for your future? When if you fall short, the government just picks up the slack. Baby boomers didn't plan for retirement, and the current generation likes to pop out kids without the common sense to stabilize their own life. Why? Because Uncle Sam will hand you money.
In short, this country is fooked.
Forget Gen Y - For even Gen X, the American Dream is dead. The good jobs are overseas. The only ones getting pensions are in the Gov't or crooked Financial institutions that bought off the Gov't for all the juicy bits. Social Security won't be there for Gen X. 401K? Seriously? Even in conservative funds and with 50% match I've LOST MONEY in mine over the past 10 years. And that's the new one - not the one I had to cash in after a year out of work the FIRST TIME I was laid off.
Seriously, Gen Y - forget college. Go to trade school. If you go to college, be ready to move out of the US, the good jobs are no longer here. It's all services, gov't, and tourism...the pundits and colleges will tell you to waste a mortgage in student loans for this or that "in demand" degree...let me tell you my career was one of those "in demand" careers....I'll tell you where it's in demand...
INDIA! And I don't speak HINDI!
Short version - we're all screwed, bend over and get ready for the ride. God Bless America.
Generation X - david393071 says..."Just think about this, how do you think we survived to be past 45, while many others of our peers did not." I know exactly how you made it past 45 WHILE YOU LOOK DOWN AT YOUR PEERS(your own fellow Baby Boomers) WITH A SMUG face. And please, after WW2, your generation
Proof as to just how much you don't know about me, my life time. The only thing ever "Handed To Me" was a Letter from the Selective Service Board.
Generation X - Obama may not even be president next year, so policies may change. Wars occur all the time. I'm prior service, I would personally have no problems reenlisting EVEN IN THE RESERVES.
Once again Ignorant. 1. Jason is not PRIOR SERVICE so he does not have Veteran's Preference., 2. Presidential Policy when it becomes a Department of Defense Directive is locked in stone, unless the succeeding President specifically by President Executive Order changes the Department of Defense Directive., 3. As if the States and the Country of Germany are going give back the Land from all the Base Realignments and Closures (BRAC)., 4. Go thru these and research RIFs: http://www.federaltimes.com/, http://www.armytimes.com/, http://www.airforcetimes.com/, http://www.navytimes.com/, http://www.marinecorpstimes.com/
as well as: http://www.defense.gov/
What date time group was the message to all MMCs (Major Military Commands) Directing the Reduction In Forces of the US Military.
ADMIT IT YOU AND THOSE THAT VOTED FOR YOUR POSTS HAVE NO CLUE.
Generation X - I'm Prior Service.
What next you want to compare penis sizes. How many DD-214s (Honorable) and sets of Retirement Papers do you have. How many Orders for Recalls to Active Duty from Retirement do you have.
An accountant - Of course we worry about retirement. We are fully aware that our parent's generation (the one that holds all political power) is perfectly content with receiving Social Security, Medicare, and Medicaid while refusing to pay the taxes on it needed to keep it funded for future generations.
An accountant - ah, um, ah, 22?
You have to have a job, paycheck with pay stub to realize that money is involuntarily deducted for Social Security.
How is Medicare paid for?
How is Medicaid paid for?
An accountant - um, ah, I dunno.
generation Y is enjoying retirement already...why would they need a second one later?
it's called mass unemployment!
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