If someone told you today they were going to give you thousands of dollars in 30 years, you’d be a fool to say, “No thanks” and walk away. Yet that’s exactly what many younger workers are doing these days when they cash out their 401(k) accounts upon leaving their job to move on to another. This common practice is more than just foolish youthful behavior. It signals a devastating trend of financial planning denial that poses a serious threat to our economy.
In a few years millions of baby boomers will reach retirement age. Shortly after that, financial analysts say, Social Security will be shelling out more in payments than it brings in. While government likely will protect Social Security payments for current and quickly approaching retirees, younger workers can’t afford to count on it.
Becoming skilled in planning one’s financial future should become as routine for young people as learning to drive. Those who’ve already entered the workforce must aggressively plan for their future and become educated about finances and planning so they can pass it on to their children.
The resources are out there. Many companies offer 401(k) programs with matching funds up to a certain percentage. Take full advantage of those programs and then keep your mitts off the money. Attend any financial planning classes your company offers and consider visiting a financial planner to devise a plan and a budget for further savings and investments to take you where you want to go.
In her book “The Money Diet,” author Ginger Applegarth says part of the problem is people aren’t saving enough but still believe they’re in good shape. They see retirement as a “moving target” and fail to account for the fact that they’ll need more than their parents because people are living longer.
Financial planning isn’t about instant gratification. Dreaming of hitting it rich before retirement is no strategy. But there’s no reason workers can’t create security for their later years. The key is to start right now. Many companies allow employees to make changes to their 401(k) accounts so they can contribute more money and invest aggressively, if they wish. Start your New Year’s resolution a little early and develop a financial plan before 2005 starts.
For younger workers, retirement is no longer the responsibility of the government or even your employer. It has come down to individual responsibility. Where you end up will tell everybody how well you planned ahead.
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
