Save up, young people


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Over the next few years, new graduates across the country will face a different job market and a different climate from that of the past two generations of Americans.

Before the financial meltdown, businesses and people were, as comedian Robin Williams put it, “economic free-basing and running into some bad subprime.” Come to think of it, that he can make more sense of what happened to the economy than the people who caused the problem probably means the good old days are long gone.

Consequently, the reaction to the financial meltdown from businesses means reduced risk: i.e., fewer people employed, more difficulty borrowing, and a weaker safety net than our grandparents and parents received over their lifetimes.

Our generation may be the first in America to have a lower life expectancy than our parents, as well as work until we die — something not seen since the Industrial Revolution. Bleak as this may seem, even our parents may not have the financial security and stability that most of the baby boomers and our grandparents have.

I admit I am painting a bleak picture for my peers. Nonetheless, it is a real one. And that’s not even factoring in everything happening on Capitol Hill, from health-care reform to cap-and-trade to the jobs bill supposedly coming our way.

If you do not believe me that American society is in trouble, you can see a perfect example happening right now in Greece. The Economist has weekly stories about how Greece’s lavish pensions have bankrupted the government, strained the European Union, and ushered in decades of austerity for Greek citizens.

So, in the event our government ends up destitute like the Greek government, what can our generation do by the time we retire?

The answer: We need to plan better and save more money than our parents and grandparents.

We can take care of ourselves by using the power of our youth, according to University of Iowa finance lecturer Todd Houge, who teaches a course on wealth management.

“If you invest money early, your assets can grow early, in comparison with someone who starts saving and investing later,” he said.

Obviously, if our generation can save money earlier and more often, we can be in better shape than our parents — many of whom have not planned and will feel the pain as they retire.

A recent survey by the Employee Benefit Research Institute found that only 16 percent of workers felt very confident they would have enough money saved for a comfortable retirement. The survey also found 54 percent of those surveyed had total household savings and investment of less than $25,000.

So we must be better savers, and that starts with us having a plan and making sure we have something to fall back on if hard times come our way.

“It’s not just about saving, but thinking about the bigger picture before investing,” Houge said. “The big thing for young people is to have a plan and have money for emergencies in case they are out of a job or in a transition period.”

As you can see, personal financial security does not start with getting a job or even with relying on the government, as the Greeks are finding out. Facing an economic climate that will be risk-averse for a long time, our generation will have to plan for the eventual hardship, save for the hardships when they come, and then save some more so we can retire sometime before age 70.

I admit retirement is a long way off for us, but start getting in the habit of planning to save for the future. Your family and children will depend on it as you depended on your parents.

So as you spend your last $20 on beer during spring break in Panama City, think about saving the next $20. As Robin Williams put it, the “In God We Trust” on the $20 bill may some day say: “Trust Us.”

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