Friday, August 29, 2008

Young workers show poor commitment to save

This recent MSNBC article stated:

“It could be a major problem. Workers in their 20s and 30s using their retirement funds to pay credit card debt and home mortgages instead of leaving it alone to accumulate. Fidelity Investments released a survey Thursday that said large numbers of young workers cash out their 401(k) accounts when they switch jobs, leaving them without an accumulation of cash for retirement.

“The typical Gen X or Gen Y will work for seven different employers across their career,” said Scott David, president of retirement services for Boston-based Fidelity Investments. “If you consider the combination of the withdrawal behavior with that propensity for multiple employers, I do think we are facing a savings challenge and crisis with this generation.”

When I left my last employer, I rolled my 401k over into an IRA. I have not added any further money to it, but I did open a 403b with my current employer when I started earlier this year. I knew that if I cashed the 401k out, it would evaporate into random purchases I would have a hard time accounting for later. I may only set aside a small amount every month in my 403b, but at least it's something. I plan to start contributing to the Roth IRA (or opening a new one) in early 2009. I hope that as my income increases, so will my contributions. I know a lot of 20/ 30 somethings out there are taking retirement investing seriously because I read their blogs! I hope that one day, saving will be the trendy "in" thing to do, like having the latest gadget or designer outfit; then I'll be able to post more positive financial stories from the news about Generation X and Y.


J. Money said...

cashing out their 401k's - YIKES!!! thank goodness my dad told me never to do it, or i'd be one of those statistics too... scary stuff if you don't watch out, that's for sure.

it's a little bit harder to come by this in the personal finance blog world though ;) whom i now consider part of my "friends" dorky as that sounds.

Money Maus said...

I agree with you. I wish saving in general (including retirement) was the "in" thing to do! It would make me feel less like a nerd :P