One of the websites I frequent a lot when just surfing the web is FoxBusiness.com. I enjoy reading some of the investing and personal finance articles on their and usually learn something new when it comes to finance. Since I plan on owning my own business someday, I also like to read up on posts in the small business section.
Earlier this week I came across an article titled “34% of Workers Have Less than $1000 for Retirement.” Yikes! Only $1000!? And that’s for just over one third of workers here in the U.S. That’s just crazy. I know retirement savings can be difficult, but I would have never guessed 34% have this amount or less.
Granted, this takes into account all workers so we’re counting a lot of people just starting out in their working careers in this figure and those in every income bracket. But as I continued in the article I found a more troubling statistic: “More than 70% of workers without a retirement plan like a 401(k) or IRA have less than $1000 to fund their golden years. If workers don’t have something provided by their employee, this means that they are saving virtually nothing on their own.”
Hmmm. Seems to me the problem we have in this country when it comes to saving for retirement is the idea of self-sufficiency or lack thereof. If our employer doesn’t offer a retirement plan, it seems we are much more likely to not take the initiative to start a retirement savings account on our own such as a traditional or Roth IRA.
Why is this? Do most people not think they don’t need to save for retirement and that they will be able to depend on social security? Or is it a bigger problem? I think the main reason people don’t start saving or barely save like the $1000 statistic, is the lack of financial education we have. While I know some high schools offer financial education as part of their curriculum a lot of them don’t. Mine certainly didn’t. If it wasn’t for all the old Peter Lynch books and the Rich Dad, Poor Dad books that my Dad had on the book shelf in our living room growing up, I probably would be part of the people with less than 1k saved up.
I think one of the requirements to graduating high school should be learning the basics of personal finance including the various ways to save for retirement and the importance of starting early. If kids today could learn the basics of what an IRA is and the difference between stocks and mutual funds, they would be much more prepared to enter the real world than someone with no financial education. While learning advanced algebra and calculus is cool and all, it only helps people move on to higher levels of education like college (unless you happen to use it in your job). It doesn’t prepare them for real life which personal finances is a big part of. While I’m not saying we should get rid of these classes altogether, I think there should be more of an emphasis on practical skills included as well. You would be much better off figuring this out when you are young and don’t have a lot of expenses so you can pack away a lot of your income to set yourself up with a nice foundation for your retirement. The earlier you start, the more you can take advantage of compound interest and the great long-term growth of the stock market.
What do you think? Did your high school offer personal finance courses? If not, how did you start learning about the topic, was it books like me or other sources like the internet?