Retirement is something most people do not start thinking about until well into their careers. After all, it is decades away. We all know that we need to start saving long before then, but how early do you need to begin?
This is part of the reason most companies offer retirement plans to their employees. If you leave it to a person in their twenties or thirties to save for retirement themselves, there is a high possibility that they will put it off until some vague future date. The reality is that you should start saving for retirement as early as possible if you are to build up to a significant figure.
However, many people are delaying retirement savings until much later into their careers. This could be a problem in the long run, but there is a reason for this trend, especially in a post-pandemic world.
Retirement Planning: The Stats
To understand just how many people are delaying saving for retirement, consider the following stats. Only 39% of American adults have started saving for retirement in their twenties. A quarter of Americans started saving in their thirties, with many more saving from their forties or fifties.
This is a problem because a lot of retirement planning is more about the growth of your funds rather than the figures saved. If you start young, your retirement savings grow with compound interest. In other words, you earn interest, then earn interest on that interest, and so on.
Experts recommend saving for retirement from when you start working. You should save 10% of your monthly income if you are to build a reasonable retirement fund by the time you retire.
However, there are some poignant reasons people are delaying saving for retirement, and the problem may grow in the coming years.
Fatalism And An Uncertain Future
The millennial generation has taken a lot of flack from older generations who consider them irresponsible. Millennials simply do not view the world in the same way as their elders. This is for a number of reasons.
One such reason is the message taught to them that they could “be anything they wanted to be.” This idea was extremely popular during the childhood years of the millennial generation. It has led to many people being unsatisfied with simply doing what is necessary to stay afloat. They were taught not to settle and instead to always chase their dreams. Most of those dreams did not involve working in an office.
This same thinking has an impact on how people manage their money. Being frugal factors into no one’s idea of a dream life. Instead of saving for retirement by sacrificing the present, many people now choose to live as best they can with less regard for the future.
Another matter is the uncertainty of the future of the world. Climate change has had a major impact on people’s approach to life. If there is not going to be much of a world left in the next few decades, then why bother saving for retirement? This obviously simplifies the issue, considering that even with climate change progressing according to projections, millennials will still have a world to live in at the latter end of their lives. But it does lead to a sort of fatalism.
The pandemic has exacerbated this. Over the past two years, we have seen millions of people around the world dying. Many of these people are over sixty. Their retirement years were taken away from them by an event that no one anticipated. Watching older people lose the years they had saved towards caused many younger people to reconsider how they lived their lives.
This is part of the reason many Americans have quit their jobs in the past year or so. They can no longer stomach the idea of working a job they hate for a future they might not live to see. It is starting to make more sense to them to try and live in the present. How to find a balance between living in the present and adequately planning for the future is a discussion for another day, but it is difficult to fault the primary idea.
If people are quitting their jobs because they do not want to live for the future, the likelihood is that saving for retirement is going to become a secondary concern for many young people. Dreaming of your sixties, seventies, and eighties can seem foolhardy when you’ve seen people die before getting to benefit from those decades.
The reality remains that saving for retirement is something that should begin as early as possible. However, an increasing fatalism among younger people is leading them to push their planning to a later date. This could have a significant impact on peoples’ lives in future decades.