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Saving for Retirement -- and Everything Before Then

By Martha M. Hamilton
Sunday, April 29, 2007

Didn't you hate the kid who always sat in the front in class? The little so-and-so who never forgot his homework -- and brought in the extra-credit assignment?

Well, don't worry, that's not what Meghan Nelson, Negest J. Hayes and Christopher Scoville are like.

But they are young people (in their 20s) who are doing what people my age are always telling them to do: They are Saving For Retirement. It's not easy; they're making mistakes; they might not keep it up. But they're taking some first steps, and I applaud them. When I was that age, I couldn't imagine being in my 30s, much less retired.

I know, you have all the excuses for not doing this yourself. You're paying off college loans, trying to make a career, trying to work out a relationship (or just get a date). But these are people in the same situation, and they have actually internalized the advice they're always getting: Money saved early is worth more than money saved later. Compound interest works miracles.

That's important because the retirement landscape is vastly changed. Young people are far less likely than their parents to benefit from a traditional pension with guaranteed monthly payments. That kind of retirement security gets scarcer every year, replaced by plans that depend more on individual savings.

Nelson, Hayes and Scoville agreed to bare their financial souls for a little professional advice. I asked two experts to take a look at their situations and to make recommendations about what more they could do.

Before we begin, let me make some introductions.

First, our experts: Anthony Webb is a research economist at the Center for Retirement Research and was a senior research analyst at the International Longevity Center in New York. Sue Stevens, a certified financial planner, is director of financial planning for Morningstar and editor of Morningstar's monthly newsletter.

Now, our young savers. Nelson is between jobs, trying to find the right niche for her creative talents. In the meantime, she's working temporary jobs and studying Arabic. Hayes is settling into a well-paying job and hopes to be able to retire by 55 but still has student loan debt and is torn between saving for a house and retirement. Scoville is working for a small nonprofit organization and considering pursuing a business degree, and he is more aware of the need to save after his mother's death last year.

Take a look at what they're doing and what the experts say they could be doing better. With luck, the help they're getting can help you make some decisions that will pay off down the road.

Read the profiles:

Negest J. Hayes: Sights Set on a House and Early Retirement, Too

Christopher Scoville: Considering Business School While Balancing Saving

Meghan Nelson: Seeking a Work Niche and Taking the Long View

Any questions about retirement that you'd like to see explored in the column? Please e-mail me at hamiltonm@washpost.com.

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