Sav­ing for Re­tire­ment — and Ev­ery­thing Be­fore Then

The Washington Post Sunday - - Business - Martha Hamil­ton

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areidn’t you hate the kid who al­ways sat in the front in class? The lit­tle so- and- so who never for­got his home­work — and brought in the ex­tra- credit as­sign­ment? Well, don’t worry, that’s not what Meghan Nelson, Negest J. Hayes and Christo­pher Scov­ille are like. But they young peo­ple ( in their 20s) who are do­ing what peo­ple my age are al­ways telling them to do: They are Sav­ing For Re­tire­ment. It’s not easy; they’re mak­ing mis­takes; they might not keep it up. But they’re tak­ing some first steps, and I ap­plaud them. When I was that age, I couldn’t imag­ine be­ing in my 30s, much less re­tired.

I know, you have all the ex­cuses for not do­ing this your­self. You’re pay­ing off col­lege loans, try­ing to make a ca­reer, try­ing to work out a re­la­tion­ship ( or just get a date). But th­ese are peo­ple in the same sit­u­a­tion, and they have ac­tu­ally in­ter­nal­ized the ad­vice they’re al­ways get­ting: Money saved early is worth more than money saved later. Com­pound in­ter­est works mir­a­cles.

That’s im­por­tant be­cause the re­tire­ment land­scape is vastly changed. Young peo­ple are far less likely than their par­ents to ben­e­fit from a tra­di­tional pen­sion with guar­an­teed monthly pay­ments. That kind of re­tire­ment se­cu­rity gets scarcer ev­ery year, re­placed by plans that de­pend more on in­di­vid­ual sav­ings.

Nelson, Hayes and Scov­ille agreed to bare their fi­nan­cial souls for a lit­tle pro­fes­sional ad­vice. I asked two ex­perts to take a look at their sit­u­a­tions and to make rec­om­men­da­tions about what more they could do.

Be­fore we be­gin, let me make some in­tro­duc­tions.

First, our ex­perts: An­thony Webb is a re­search econ­o­mist at the Cen­ter for Re­tire­ment Re­search and was a se­nior re­search an­a­lyst at the In­ter­na­tional Longevity Cen­ter in New York. Sue Stevens, a cer­ti­fied fi­nan­cial plan­ner, is di­rec­tor of fi­nan­cial plan­ning for Morn­ingstar and ed­i­tor of Morn­ingstar’s monthly news­let­ter.

Now, our young savers. Nelson is be­tween jobs, try­ing to find the right niche for her creative tal­ents. In the mean­time, she’s work­ing tem­po­rary jobs and study­ing Ara­bic. Hayes is set­tling into a well- pay­ing job and hopes to be able to re­tire by 55 but still has stu­dent loan debt and is torn be­tween sav­ing for a house and re­tire­ment. Scov­ille is work­ing for a small non­profit or­ga­ni­za­tion and con­sid­er­ing pur­su­ing a busi­ness de­gree, and he is more aware of the need to save af­ter his mother’s death last year.

Take a look at what they’re do­ing and what the ex­perts say they could be do­ing bet­ter. With luck, the help they’re get­ting can help you make some de­ci­sions that will pay off down the road. ON­LINE DIS­CUS­SION Martha M. Hamil­ton will dis­cuss fi­nan­cial plan­ning for re­tire­ment with An­thony Webb, a re­search econ­o­mist at the Cen­ter for Re­tire­ment Re­search, at noon Tues­day. Any ques­tions about re­tire­ment that you’d like to see ex­plored in the col­umn? Please e- mail me at hamil­tonm@ wash­post. com.

BY BRIAN AJHAR FOR THE WASH­ING­TON POST

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