The Insured Retirement Institute released a survey this week (described on the Wall Street Journal”s Smart Money blo
g) about the state of baby boomer retirement. It is indeed a sad state, but nothing new to report. As previous surveys have indicated, they are simply not ready:
- 35 percent of 50 to 66 year olds expect to retire after age 66.
- Another 23 percent expect to work into their 70s.
- A staggering 40 percent of middle-income boomers (those earning between $30,000 and $75,000) have stopped contributing to their 401(k) or individual retirement account.
These are sobering statistics. But there may be a silver lining for future generations. MSN Money recently reported that today”s 20-some year olds (Generation Y, as they are called), have seen the struggles of their baby boomer parents and do not wish to experience the same fate. The good news is: they want to prepare for retirement; the bad news is: they are not sure how.
If there was ever a time in history to mandate finance classes in high school
the time is now. A few lessons in finance do not have to be at the detail of graduate-level international finance, accounting or banking. But it would be helpful for today”s youngsters to know how banks really work (and not what they read on an “Occupy” protest sign), how financial markets work, and the different options available for saving and investing. Most of all, young savers need to know the truth about compound interest (yes, it works beautifully when you save early and often), buying stocks and mutual funds (anybody can buy, not just the wealthy) and Social Security (it will likely be there, but you will be disappointed with its rate of return compared to what you could invest yourself).
Otherwise, the retirement plans of Generation Y will be lost to years of apathy and financial ignorance.