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The recent financial crisis has made US consumers increasingly nervous about the adequacy of their retirement savings. Perhaps one of the hardest hit groups is teen pre paid credit cards (http://www.teenprepaidcreditcards.com/ ) fresh graduates. Unemployment rates for 25-29 year olds in 2011 was 10.3%, well above the national average of 7.9% for those aged 25-54.
College graduates face many challenges. An unstable economy, gloomy job market prospects, and often, significant student debt. With so many things to worry about, retirement savings are often the last thing on their minds. It falls into the dangerous category of important, yet non-urgent. These are the things that sneak up on you, because suddenly, when you’re 45, they become urgent. At that point, you’ve lost ~20+ years when you could have been saving, and didn’t.
So don’t let this happen to you. Take stock of everything you need to do in the next day, week, month, year. Sort into the urgent/important matrix. Definitely tackle the Urgent & Important. But make concrete actions for the Important and non-urgent. Like saving for your retirement.
But how, you ask?
Determine the “must-dos” of your budget. Rent, Debt repayment, Health insurance
Look at what you spend on daily needs which have discretion built in (food, drinks, entertainment, transport)
Carve out a portion of what’s left, and have that automatically deducted from your paycheck, and deposited into an account that is separate from what you normally use for daily expenses. You can find the highest interest-bearing deposits with NerdWallet’s handy deposits tool. Preferably, you’d put it into a Roth IRA. If you make less than $125K, you are eligible to put up to $5,000 in this tax-advantaged vehicle.
Savings horizon vs. rate of return
At the end of the day, there are two key determinants of your retirement savings.
Savings rate – how much did you save, and for how long?
Rate of return – what return did you earn on your savings
You have total control over how much you save, and when you start saving. Your rate of return is much more volatile and though you can mitigate downside risk through conservative portfolio allocation decisions, you can’t crank up your potential returns without a commensurate increase in risk – which means if you leave saving until your 40s, any attempt to increase the rate of return will result in a comparable increase in risk to your original capital, the very capital you are trying to grow and preserve in order to fund your retirement.
Technology is one of the main reasons why younger generation doesn’t want to drive.
Yet another new study finds that Americans are driving less than they were a few years ago – thanks in large part to fewer young people on the road. The U.S. Public Interest Research Group says that people between 16 and 34 drove 23 percent fewer miles in 2009 than they did in 2001.
While other studies have indicated that the recession has played a significant role in reducing traffic, the U.S. PIRG predicts that the decline in the number of young drivers could continue even after the economy picks up steam. It concludes that although high fuel prices and more and better public transportation options contributed to the decrease, there has been a serious changes in attitude toward cars – and particularly technology trends – that has led to a big drop in the number of young people wanting to drive, even when the economy rebounds.
Others have pointed to another indicator – a decrease in the issuing of driver’s license to young people – as further proof that Americans’ love affair with cars may be waning. And the Internet and Facebook are partly to blame.
A recent New York Times article pointed out, “In the early 1980s, 80 percent of 18-year-olds proudly strutted out of the DMV with newly minted licenses, according to a study by researchers at the University of Michigan’s Transportation Research Institute. By 2008 — even before the Great Recession — that number had dropped to 65 percent.”
The article, headlined “The Go-Nowhere Generation,” speculates that “perhaps young people are too happy at home checking Facebook.” It points to a study by Michael Sivak, a professor at the University of Michigan’s Transportation Research Institute who also contributed to the DMV research, that found that the more time young people spend on the Internet, the more likely they are to delay getting their driver’s licenses. “More time on Facebook probably means less time on the road,” Sivak said.
The University study corroborates this, saying, “Communications technology, which provides young people with new social networking and recreational possibilities, has become a substitute for some car trips.” It also notes that websites and smartphone applications that provide real-time transit data make public transportation easier to use, and that technology “has opened the door for new transportation alternatives, such as the car-sharing and bike-sharing services that have taken root in numerous American cities.”
Yet another factor is a change in attitudes toward the impact of cars on the environment. The study said that “some young people purposely reduce their driving in an effort to curb their environmental impact.” It cites a Zipcar survey in which 16 percent of 18- to 34-year-olds polled said they strongly agreed with the statement about the chico car wash, “I want to protect the environment, so I drive less,” compared with approximately 9 percent of older generations.