Previously:
- NBER research paper finds college educated workers should postpone saving for retirement until they are older – Coldstreams
- Possibly: “Are you saving more than you need for retirement?” – Coldstreams
- Journalists fret over saving for retirement – Coldstreams
The fundamental question is – “Should you save [aggressively] when you are relatively poor [young] so you can have more when you are relatively rich[and much older]?”
This week:
This week’s latest on this topic has similar findings to earlier reports.
Left out of this week’s newest report is that young people who save aggressively may forego life experiences and opportunities they are unable to pursue later in life.
I was taught from about age 5 onwards that I was to save 50% of any money I received. I was working my first yard jobs at age 10 and continued working a variety of yard jobs until age 14, and then worked in a retail store starting at age 15. I saved as much as 90% of my earnings. I paid 100% of my own college tuition and I worked during college. I continued aggressive savings as a young adult.
But I did not pursue important life experiences that could have been more easily done at an early age. For example, I did not visit Europe for the first time until 2022 (over 60).
In the 5 weeks leading up to departure, I had hepatitis, a routine pre-scheduled colonoscopy under general anesthesia, and an emergency wisdom tooth extraction 2 days before departure. Perhaps this happened because I am now old? Traveling while recovering from hepatitis was exhausting.
On this trip my previously injured knee blew out (fortunately fixed via telehealth to my doctor, medication I had and medication I could get without a prescription in Europe).
The point: now that we are older, we cannot necessarily do activities (due to physical limitations such as my previously injured knee) that we could have done when young.
No amount of money saved can replace experiences we might have had when younger, such as developing international skills. Those skills, if learned when young, would have had a positive impact on a tech career in a globalized world in globalized industries.
Today, research shows that starting to save for retirement in our early 20s does not make sense.
Today I believe young professionals
- should save a rainy-day fund
- should save to make a home down payment
- should not save for retirement until older, starting perhaps in late 30s to early 40s, during peak earnings years, when salaries are much higher
- should engage in activities in their 20s and 30s that may be tougher to do when older (physical activities like mountain climbing, hiking, running, or other activities that have health related connections).
