As 20 somethings, we’re worried about studying for exams, earning money to pay for living expenses, and on top of all that, tuition. Why should college students even bat an eye towards retirement when that’s literally 40+ years away? We say, “Oh I’ll start when I get a solid career” or “I’m broke, I can’t afford a retirement fund. Besides, that’s old people stuff…”
Here’s the thing: As college students we may not have a lot of money, BUT what we do have on our side is TIME. AND YOU CAN’T GET TIME BACK. Yes, we’re shouting here.
We believe that retirement should be one of THE most important financial goals that we should be working towards. And as Peer Money Mentors, we have the luxury of learning about this concept, and make adjustments so that we can properly prepare for our financial futures. Who else is going to do it for us?
In our program, we’ve learned something very interesting… An estimated 79% of Americans work for an employer that offers a retirement plan, yet, the U.S. Census states that only 41% contribute to their retirement. No one is really ready for retirement.
Imagine making a shift in your money mindset, and you start moving funds from your entertainment and eating out budget into a retirement account. We’ve heard the Dave Ramsey story of Ben and Arthur over, and over, and over again.
For the sake of time, let’s focus on Ben. At the age of 19, Ben started saving money for retirement, $2000 per year, which is $166.67 per month. Let’s say on average he earned about 12% interest on his investments. He contributed the same amount every month until he turned 26. Then he stopped making contributions. By the time Ben retired at the age of 65, he had $2,288,996 sitting there waiting for him.
When you apply Einstein’s famous quote, “The power of compound interest… the 8th wonder of the world” to money, something really magical happens. We’re not talking about some Cinderella bibbidi bobbidi boo stuff, We’re talking about the magic that happens when you combine youth, consistent investments, and years compounding interest.
Let Suze Orman tell it, we’re going to need millions to retire. And with inflation, the cost of healthcare, and overall debt, we believe her. So, we’re starting to think about how to invest in our futures by setting aside money for retirement.
Check back next week to learn about retirement accounts that are available. And remember, saving for retirement is looking out for future you.