Young Americans Can’t Save Money
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 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. If you consider the combination of the withdrawal behavior with that propensity for multiple employers, we are facing a savings challenge and crisis with this generation.”
About 74% of generation Y workers, born between 1976 and 1987, said money worried them most. Half of the workers in the two age groups said saving for retirement is an obligation or a goal but 51% said other financial priorities prevent them from setting aside money. Mortgage payments and managing credit card debt ranked higher in importance than retirement saving.
The key to changing the behavior is to get younger workers to seek advice when they change jobs so they understand they can leave the money with the employer, roll it over to the new employer’s plan or put the money in an IRA.
The U.S. Bureau of Labor Statistics says Generation X and Generation Y workers will surpass baby boomers as the largest single segment of workers in the United States by 2010 when they will represent 60% of the U.S. work force.
