From yesterday’s Wall Street Journal:
“The study, by Prudential Financial Inc., found that seven out of 10 Americans are more concerned with near- and midterm goals — paying bills, buying computers, making home improvements — than saving for retirement.”
Higher salaries do little to change these priorities: Households with income of more than $75,000 are just as likely as those earning less to say that saving for retirement isn’t a primary objective.
The research shows that many people who postponed retirement in the past three years did so to get financially ready. Those still in the work force aren’t any better off, with the majority saying they are “behind schedule” in building their nest eggs. This, as well as longevity concerns, likely explains why more than 70% of Americans expect to work during the first 10 years of retirement , according to Prudential.
In other words, we think things are tough today so we put off retirement planning until tomorrow.
Let’s look at the research to see what’s out there: Human Brain Overestimates Available Time Weeks In Advance. In a February 2005 study in the Journal of Experimental Psychology, “Participants believed that both time and money would be more available in ‘a month’ than ‘today,’ and believed it more strongly for time than for money.”
When it comes to retirement planning, it’s always easy to think things will get better later. How many times have you said things like…
- “I’ll have more money later” or
- “I just have to make this car payment” or
- “I’m not sure what a Roth IRA is” or
- “None of my friends are doing it…so what’s the big deal?”
Imagine if you could be ahead of the 70% of Americans who aren’t particularly concerned with retirement planning. What would it take at age 23? Not much, because small investments make a huge difference over a long period of time.
I know, I know, I haven’t written anything specific about retirement accounts (Roth IRAs, 401(k)s, etc) yet, but I will ASAP. Just let me graduate first!