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Retirement outlook for 20-somethings

People of this generation enjoy few of the advantages that enabled their grandparents to build worry-free golden years.

By MSN Money Partner Jun 11, 2012 11:08AM

This post comes from Tim Sullivan at partner blog Get Rich Slowly.

Get Rich Slowly on MSN MoneyOver Memorial Day weekend, a few friends and I took an RV to Banff in Alberta, Canada. I'm from Chicago and have been in the Pacific Northwest for only a few short months. We Chicagoans are flatlanders and the splendor of the snow caps that now surround me is a source of a daily inspiration.

Image: RV © Grant Faint/PhotographerWhile we were heading through Glacier National Park, I sat at the coffee table playing cards with my girlfriend, contemplating the turquoise meltwater when Brian said from the front seat, "Take a good look, my friends. We're gazing into the future. Here's us in 40 years. This is what retirement looks like."

It led to an interesting discussion among a group of 20-somethings about how we picture our retirement. Visions of Florida, golf courses, cruises and RV trips didn't fit for any of us. We agreed that our generation, with its student debt, a terrible economy and little ability to trust in the solvency of Social Security, has to redefine its image of retirement.

Why 65-ish?
Right now, according to the website for Social Security, I'm set to retire in 2053, a year that seems positively scifiesque. My NRA (normal retirement age) is 67. Why 67?

According to the website, Social Security was set up as part of FDR's New Deal in the 1930s. The retirement age was set at 65 to pay older workers to leave the workforce, making room for younger workers. Keep in mind that the average life expectancy for men in the 1930s was just under 60. In other words, the government would give you money to stay at home only if you made it to the modern-day equivalent of 89 years of age.

My great-grandparents would have benefited from Social Security if they could've lived another 10 years. My grandparents and their contemporaries cashed in, propagating the image of retirement as golf pants and yacht shoes. Since then, the retirement age has gradually been increased.

Post continues below.

Life expectancy on the rise
With the rise in life expectancy and population growth has come an increase in how many people are getting Social Security benefits. I found these numbers on the SS website:


Number of recipients

Dollars spent





























I agree that spending mere millions to usher older workers to a more relaxed lifestyle, making way for the young blood ready to throw their hats in the ring, was a great idea. What's harder to chew is the now 50 million-plus living well past 65 and the $615 billion going to them each year. I'm not here to debate the ethics of it; just the reality that, with the baby boomers readying themselves for retirement, I'm not banking on much coming my way when 2053 rolls around.

Baby boomers' parents
My parents' parents were able to make out like bandits for the exact opposite economic freakishness that my generation is struggling with today.

  • They had no reason to doubt the strength of Social Security.
  • They graduated college with little or no debt and could start saving immediately. (The GI Bill covered college for many of them.)
  • Half of them had pensions, which is far from reality today.
  • When they were ready to sell their homes and move to sunnier pastures, the baby boomers were coming of age, quickly filling any vacancies and driving up housing costs.

Gen Y-ers do not enjoy any of these advantages. Even if my dream was to be behind the wheel of a golf cart for the rest of my days, the odds are against me.

Meaningful retirement
As we got closer to Lake Louise, we all attached ourselves to the idea of a meaningful retirement rather than a leisurely one. Two of my RV companions work for big corporations, involving a lot of desk time -- jobs they like fine but probably wouldn't want to do for the rest of their days. The list of things they could see themselves doing in their golden years includes:

  • Group exercise instructor.
  • Tour guide.
  • Museum docent.
  • Farmers market worker.
  • Secret shopper.

These options are geared to their specific passions. They will generate some income and take some time and energy. This isn't a list of full-time jobs, but activities to keep them young and not wholly reliant on savings. From there, I spouted off some of the tenets of Get Rich Slowly, which I plan on following in retirement:

  • Money is more about the mind than the math. Knowing the numbers is secondary to playing the mental money game well. One thing the older folks around me seem to have is wisdom. With another 40 or so years to figure out how to control my spending, I hope I'll have most of the mental aspects of money down.
  • Small amounts matter. I practice frugality now and will continue to in the future, whether I'm earning every dime or it comes from savings or Social Security.
  • Large amounts matter, too. Yes, I'll be frugal, but there are a lot of smart decisions I can make before retirement to free up finances during retirement. Whether it's paying off my mortgage or making the right decision on a car, getting the bigger expenses out of the way will free up a lot of possibilities.
  • It's more important to be happy than to be rich. I don't want to worry about money in retirement but, even more so, I don't want to obsess about money in retirement. I want to continue to cultivate my joy in simplicity, and have that carry through indefinitely.
  • Do what works for you. There's no right way to save and there's no right way to retire. If you have your golf clubs picked out, good for you. If you're hoping to do your same job past 100, awesome. I like the idea of a physically active retirement. Maybe that means picking potatoes, maybe it means leading those super cool pool dance classes. Whatever you do in retirement, make it meaningful, not just leisurely.

I can't predict what my retirement will look like. I know the game has changed and that the image of the perfect retirement no longer exists. For now, I'm going to continue to save for whatever the future may hold and, when I can, enjoy a little taste of what my great-grandparents might have experienced in an RV, gazing wistfully out the window as the scenery flies past. Why wait, right?

Have you started thinking about your retirement options? For those of you closer to your NRA, what will retirement look like for your children?

More on Get Rich Slowly and MSN Money

Sep 7, 2012 8:22AM

This is not a Dem or Rep issue, it is a lack of personal responsibility! Until we as Americans quit looking for a handout and quit voting in moorons that keep catering to the undeserving and illegal. We can expect the same. Continually putting more debt on future generations is treason! 48% of Americans paying no federal taxes is crazy as they are the ones receiving the most handouts from the government and why would they vote different? Throw all congressional bums including the president on the same healthcare, retirement-SS, and under the same laws as taxpayers and things WILL change.

Sep 7, 2012 8:39AM
Retirement only belongs to those willing to work and save for it.  It's not a right of the American people.
Sep 7, 2012 10:21AM
I'm in my 50's.  I worked with a lot of younger people at one time.  One day a young woman I worked with came in and proudly showed off her new iPhone.  I asked her how much it was and she said without batting an eye "it was $600.00".  Of course, she ran out of money by the end of the month and literally was starving the last week.  It's not like she was some star-eyed teenager either, she was 25 years old.  By the time I was 25, I already had started my 401K (she didn't have the money to give $10/wk), a ROTH, (no money for that), and I was paying for company-sponsored healthcare, (nope, she didn't have the $11/wk. for that either).  Your future is what you make of it and it is your responsibility.  Will 20-somethings have a retirement ?  If they are willing to work for the next 40-50 years and plan a little  bit there shouldn't be a problem.  The key is to start early.  Once you get into your 30's and 40's it is almost impossible to make up for lost time.  Time and patience are two of the biggest factors into making a healthy, happy retirement.
Sep 7, 2012 9:07AM

If the y gen wants to learn how to retire in later years, ask your grandfather how he did it and with only one income. Grandma stayed home and raised your mother or your father. The WWII generations and those that followed up into the 60's can give you the answer to the question. 


 All that you have to do is follow what they did by saving, buying a small starter home, driving an inexpensive car, buying your clothes at the downscale stores, eating at home, control your debt, (no credit cards), if you don't have the cash to spend, don't buy it. 


 Its not easy but that's how most of my generation did it.

Sep 7, 2012 8:40AM
If your retirement plan is basically "I'll live off social security" that's basically saying "I plan to be old and broke" which, by the way, officially qualifies you as an idiot for saving nothing at all.
Sep 7, 2012 10:19AM
Ok, most every 20-something I know has already traveled Europe, South America, Asia, etc...

They own every sort of electronic gadget possible.

They drive nice cars.

They eat out ALL THE TIME.

They do "whatever they want".

To me, they have ALREADY lived their retirement, so logically, they now have to work until they die.  They just took their retirement early, that's all.
Sep 7, 2012 6:31AM

What amazes me is the number of people, this author included, that believe Social Security is the center piece of a happyretirement.

SS benefits were never intended to be anyone's total retirement.  It was to be a supplement to your retirement.  And why is it that no one asks what happened to all the money that was put into SS?  Oh was used for welfare programs not related to providing a retirement for those who earned and paid into SS.



Sep 7, 2012 9:56AM
Boo hoo, what a lot of crap.  When I was 20 something mortgage rates were 14% and the economy was mired in a recession combined with rampant inflation.  The outlook seemed bleak.  But guess what?  Things got better.  I'm really tired of hearing about the woes of 'the entitled generation'.  Work hard, live within your means, save money and retire comfortably.
Sep 7, 2012 11:33AM
You are what you make of yourself -- nothing more, nothing less! My first job payed one dollar ($1.00) per hour, plus 10% of anything that I sold at a gas station. I sold more oil, filters, brake shoes, and batteries, than anyone there before me. My next job payed $2.80 (minimum wage at that time). I worked 62 hour weeks, and put myself in college (I also worked a job while in college). I eventually became a Tool and Die Maker at $32.50 per hour. Then GW Bush took office, and it all went overseas. I started my own small business, and eventually retired. Over the years I paid $187,000 into the Social Security program, while investing pennies, nickels, dimes, and quarters into monthly payments in an individual retirement program. If you don't think social Security will be there for you --- invest in those individual retirement programs. Buy cheaper electronic toys, don't smoke, don't buy drugs, drink in moderation; and you will be amased at how much investment monies you actually have. If you are 20 years old, you have far more opportunities than I had at 20, or even at 25. Every nickel that you spend to entertain yourself, is another five dollars out of your retirement. once you reitre, like me, you can buy all the entertainment in the world. Keep your mind on your job, and on your family, and less on your expensive "cheap thrills". Remember: you are 20 years old now -- not thirteen! Also be careful how you marry: if your spouse needs drugs, and cheap entertainment at age 25 --- you are s-o-o-o-o screwed.
Jun 17, 2012 8:02PM

I'm well on my way to retiring at 59..have 13-14 years to go.  I don't 'count' on SS or an inheritance.  If I were in my 20s again, this is what I would want to know:

1.  Establish an emergency fund first

2.  Contribute as much as you can to your 401(k) or IRA - start with 10 to 12%

3.  Increase that contribution with every raise you get - don't take contribution holidays and don't take loans.

4.  Changing jobs?  Trustee to trustee transfer your balance.  Do not cash out - the penalty and tax is crippling. (If you fully vest soon, stay put to 100% vest in employer match - after all - free money is not free until it is truly yours).  See #1 above, tap that when changing jobs if needed, never tap your retirement. Always have that emergency fund 'insurance'. 

5.  Employed again...replenish your emergency fund and get into your new retirement plan

6.  Always make sure you have health and disability insurance

7.  Buying a home?  Do not tap your retirement to do so, save your down payment separately

8.  Increase your emergency fund - home surprises can get expensive

9.  Have you been faithfully increasing your contributions?

10. Work to pay down that mortgage and do not retire until that bill is paid in full

11. Planning on retiring early?  Establish a 'bridge fund' enough to carry you to 67 by socking away what you used to pay in mortgage payments.

12. Don't figure in Soc Sec when running your numbers, if it is there, well consider that a bonus.

13. There are no loans for retirement, so if you do not have extra cash laying around to pay your kids' college tuition, you can't afford to pay that with your retirement funds - have kids get a loan, work or scholarship to pay.


In short - always consider your take home pay as NET of taxes AND your emergency fund AND your retirement contributions.  Don't balk at market downturns (think of those as buying on sale).  If you pay yourself first, and only consider the remainder fair game, you will succeed.  I wish you success in your retirement planning endeavor!

Sep 7, 2012 7:32AM
I remember my first job... working in the fields with my grandparents.  My reward was food for our family.  I worked nights and weekends in highschool at a deep discount retailer.  With money I saved from my $4.35 hr job I started a vending company at 18.  Student loans and bartending helped me get my degree.  I read every book I could on finance and economics.  I am now 33, have a 6 figue income, real estate, brokerage accounts, 401K, and IRA.  After earning my CFP I developed a financial plan that does NOT include social security and am confident that I will be just fine.  Work smart, don't expect a hand out, depend on yourself.  YOU determine your fate.  Sink or swim....
Sep 7, 2012 3:26AM

Oh yes, I can't wait to be (1) Aerobic Instructor  (2) Secret Shopper
Who the *uck printed this stupid **** stuff?
I'm going to be a "sampler Lady' at Costco - shoving everything into my mouth (and purses) when you are not watching -


Sep 7, 2012 7:48AM
For all the reasons covered in the article, these younger generations will return to the wisdom of
our Grand Parents and save heavily for retirement. Not a bad thing. The system has gone full circle and a new age has begun, again.
Being responsible and accountable for working is how I learned to earn. I have a lot of people who nurtured me away from the days of laziness to responsible work ethic. I esrned %3.05 per hour at one time as a single 23-24 yr old as a welder, yeah the late 70's but worked night shift to do it for a whole nickle extra, that .05 on the $3. I worked my way into becoming a high pressure stem pipe welder for $9.85 per hour after a couple of years, but persistance paid off. In the late 70's $9.85 non union was good money with the economy as it was then. My best friend from high school and I worked together, rented a small trialer for $100 per month and gas prices were less than $1 per gallon. It was still hard hot work outside in the summer as a welder with temps at over 100 degrees in SW Oklahoma at the time in leathers, hard hat, safety glasses and steel toed boots. We both did it as journeymen welders and you can do whatever you apply yourselves. We worked with Indians, Mexicans and Whites, there was no racial issues, because all of us sweat like real men. Nothing we earned was given to us, like so many expect today. We were in our 20's and what is your problem applying yourselves?
Jun 16, 2012 7:57AM
First of all, your premise that SS was instatuted to encourage older workers to leave the work force is wrong.  SS was initiated to help older people stay out of poverty when they were no longer ABLE to work.  Further, your lead line  of "building worry free golden years" sounds like a bad commercial and is just as far from the truth.   SS was never intended to provide for one's retirement, it was to provide a base (or floor if you will)  for income.   As for me, at age 73, I am still working as a broker, run a small cattle operation, receive $1760/mo from SS and a like amount from private investments.   Enough, but hardly the life you imply in your article.  
Jun 13, 2012 1:01PM

Good luck kids.....Sorry we screw everything up.


Why in the world did we keep reelecting the same people to congress? Now wonder things are a mess........Sorry kids.

Sep 7, 2012 8:10AM
We all think of social security as a pension.When I spoke with my grandparents (65 in 1961) years ago, they remembered  the start of social security as a supplement to savings. Grandpa worked till he was 70 no golf pants for him. 
Jun 13, 2012 1:05PM

My advice for the 20 something's is max out your 401k and Ira's & Pleasssss don't keep reelecting the same Idiots to congress.


These old duds don't have any fresh Ideas.

Sep 7, 2012 10:44AM
Only if they work towards it.  If you want to have a nice retirement, then start saving for it in your 20's.
Sep 7, 2012 7:19AM
Retirement is overrated.  My grandfather worked in his small business until he was nearly 90, working almost literally to the day he died.  Happy as a clam, he was.

Warren Buffet is 82, still works.  My business partner is nearly 80, keep threatening to retire, but then comes to reality and asks "What else would I do?"  He takes long weekends, comes in at 10AM, but is still productive and vital.

What you young people need to understand is that this vision of retirement you guys have been sold is an illusion, it simply doesn't work out mathematically.  Assuming you start working in your early 20s and work for 40 years, you can't just expect to lay around for 30 years after that.

The fact is that this notion of "retirement" is a recent and deeply flawed concept.  In all of human history, people have usually worked in one form or another until they were physically unable or just croaked outright.  And that's the way it's supposed to be.  If you can't contribute to the tribe you're a hindrance.

I'm planning on working until the day I turn my toes up, and not because I'll have to, as long as things don't go horribly wrong I'll have plenty of cash.  I'll work because if you CAN be productive, you SHOULD be productive, and I don't want to be a burden on my fellow man.

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