People are always trying to find the secret to financial success.
But I’d like to address, in particular, the young folks who ask me how to get rich.
If you’re young, you have something we older folks don’t have as much of — time. It’s an advantage you shouldn’t waste.
Start saving in your 20s, and you’ll have time for your money to grow. You’ll have time to enjoy the fruits of compound interest. You’ll have time to weather stock-market volatility. The earlier you start saving, the less you’ll have to save over time.
Benjamin Franklin told us to “remember that time is money.” And Shirley Temple Black, looking back on her life as a child star, said, “Wasted time means wasted money means trouble.”
Yet polls on retirement saving continue to prove another expression: “Youth is wasted on the young.”
It seems that young adults aren’t listening. Or, as one new survey found, they may be listening but so overburdened with debt that they feel they can’t afford to save.
The nonprofit Investor Protection Institute did a poll of more than 1,000 millennials and not surprisingly found that 49 percent had student loans — including 13 percent with $50,000 or more in college debt.
But it is this next statistic that is especially troubling: 34 percent said that debt is delaying their ability to start saving for retirement or that they haven’t been able to save as much as they had hoped.
Don Blandin, chief executive of the IPI, said the survey results should reinforce advice often given to young adults to save as early as possible.
“I know we sound like a broken record, playing this message over and over again,” Blandin said in an interview.
Then he thought of the audience and said: “No, wait, guess that would be we sound like a damaged vinyl that is back in style. But what we want to do is help them learn that it’s so important to start early.”
Blandin offered this personal testimony about the benefit of time:
On his second professional job, way back in 1972, he managed to save about $20,000 over five years. Under the company retirement plan, his employer contributed an additional $25,000 to his plan. He eventually left that job but let the money grow, with no additional contributions, in a diversified portfolio of mutual funds. By 2000, 28 years later, it had grown to $750,000. He’s now 67 and preaching the gospel of saving early.
It’s not a message that should get old, even if some of the people giving it are. But clearly our job is not done.
Just recently, a column posted on Elite Daily, a news and entertainment site written by and for millennials, went viral. The headline was, “If You Have Savings in Your 20s, You’re Doing Something Wrong.”
“When did our 20s start to feel like our 40s?” says the writer, Lauren Martin. “I’ve recently figured it out: This pressure, this third-party stress, is ingrained within us. It’s this looming doom our parents carved into our unconscious, only to come out anytime we make an impulse purchase or have to spend the night without Netflix.”
Martin continues: “They want us to save because it provides us with a safety net, but that’s exactly why we shouldn’t. Their need for us to have a safety net is just a giant metaphor for the difference between our parents’ generation and ours. When you live your life around your retirement fund, you may as well retire now. You can’t make a mark on the world if you’re too cheap to live in it.”
I wanted to ask Martin whether she was being serious or the column was satire, but I couldn’t reach her. I do hope it was the latter because the advice is seriously reckless.
“When you care about your 401(k), your life is just ‘k,’” Martin wrote. “When you’re 40, you’re not going to look back on your 20s and be grateful for the few thousand you saved. You’re going to be full of regret.”
For some young folks, youth truly is wasted on them.
In announcing the results of the IPI survey, Blandin said: “These are the years that will make the difference between comfortable and lean golden years. Saving and investing for your retirement should not be viewed as optional.”
We aren’t saying not to have fun. But if you use the time you have wisely, you can create great wealth and security and never be a burden to others.
Write Singletary at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071 or firstname.lastname@example.org.