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I'm just curious if my situation is abnormal.. or the norm for people here.
When I was 16, I got my first job and opened my first bank account. With the account, I got a savings account, checking account, and fee-free IRA. Without any financial obligation, I put a large portion of my check into the IRA, $50 into my checking, and the rest into savings.
Now, I'm 20. I got a better job and I've got financial responsibilities with my apartment... so I'm putting a lesser percentage (but around same amount) into the same IRA. I recently got a letter stating that because I've been so good about keeping my eye on the IRA, they're raising my interest rate!
So my question is: when did you start saving for retirement?
It is never too early to start saving for retirement. The earlier the better. I did not start until I was in my 20's and have been agressively saving for the past 15 years. Prior to then I worked for companies that had "marginal" retirement savings plans and I did not trust them. Good thing, one place I left had the owner walk off with employee's money when the place folded. the employees sued him but only got pennies on the dollar. I fortunately got all that I had put in. I now recommend that everyone put a minimum of 10% into the company's 401k plan and push for them to max it out if possible. One of our young secretaries wasn't doing anything and was losing the company's match. I kept after her to do and she finally relented. Years later she thanked me for pushing her. She now has a nice little nest egg growing for her future. Jay
I agree. You can't start soon enough. Especially now that there are few pensions to be earned and what is left is often stolen by corporations.
When I was 16, I put most of my earnings away for college. As soon as congress passed the law creating IRAs (in my early 30's), I put away the max allowed. Been maxing out on the 401k for as long as its been available too. Anyone who has matching contributions and is not getting that is throwing away money they will need.
My grandfather gave me 100 shares of stock when I was 16. I was thrilled at the prospect of having "real money" one day and I decided then and there that I wanted to retire early. I was on a mission! I saved whatever I could, and bought my first home at 19 when I married. Sold it at 24 and split the proceeds with my soon-to-be ex-husband. Bought more stock and put some money in CD's. As a single mom for the next 13 years, worked and saved while raising my son. I needed money to live on, but I needed to save, too. I packed up the kid and moved from Chicago to Massachusetts to try to find a better environment for my child. I was lucky enough to find work with a company that had good benefits, a pension plan and an ESOP, so I worked overtime to fund my 401k and buy company stock. Took advantage of tuition reimbursement to finish college. Was promoted to middle management. The company closed after 17 years and I searched for another company with a pension and good benefits. Found one, moved up to a senior management position and recently retired at 58 with two pensions, a seven-digit portfolio and good health. All thanks to the inspiration and financial education that a gift of 100 shares of stock brought me at 16.
Starting putting money into a retirement account at 29. I definitely should have started earlier. I now have 2 401Ks and a full-blown company funded traditional plan that will be worth a lot at retirement age.
I'm just curious if my situation is abnormal.. or the norm for people here.
Please accept my apologies in advance for the following generalizations. I believe the majority of post replies to your question so far are in the minority (I don't want to use the term abnormal), although they represent true successes in retirement planning. You did not specify where your motivation came from to start saving at 16 y.o. However, it is clear from leorah's post that she had a benevolent grandfather as a mentor. In the post by JayCT, he is serving in the capacity of a mentor for his secretary. In Tesaje's post there is no personal mentor, but negative examples of companies such as Enron have served as a de facto mentor.
My point is that the majority of people do not start saving for retirement until they are TAUGHT to do so. Some are fortuitous enough to have this occur early in life. For the majority of us using hindsight, the lesson comes later than we would like. Again, permit me the generalization that the very old among us had little left over from the Great Depression AND they had 100% faith in Social Security, AND there were no government programs i.e. IRAs AND they had company pensions. Therefore there was almost no motivation to save. The next generation (Babyboomers) still had some of these safety nets,i.e. Social Security, and they were motivated more by the tax breaks of 401Ks, IRAs than by the need to save for the distant concept of retirement. In contrast, people in their 20's & 30's appear to be starting their retirement savings much earlier. Unfortunately, their "mentor" has been the total destruction of any psychological "safety net" caused by companies dumping traditional pensions, company declaration of
bankruptcy allowing the abandonment of pension promises, "head-in-the-sand" denial by Congress over a broken Social Security system, stealth switching from "defined benefits" 401Ks to "cash benefits" 401Ks, etc, etc.
Therefore, my personal answer to your question is "I started too late", because I wasn't fortunate to have a mentor, and I didn't learn about the defects in traditional retirement systems until my 40's.
Just so the above doesn't sound like a pessimistic recapitulation of the problem, here is one proposed solution. Make retirement planning a required course in high school. Albeit some teenagers will not pay attention, with visions of purchasing their next videogame. However, if the knowledge was available to me at that age, I like to believe that I would have used it.
In addition, give people some autonomy to make their own decisions about monies taken out of their check for "social security". Again, a few people will make poor decisions. However, if people are given knowledge and autonomy I believe they will start saving earlier.
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my motivation... I watched my folks get sick and go broke and lose EVRYTHING when I was in HS, so I started at age 16 too. (being homeless and all...) But not because anyone taught me, or told me. Same with buying my first house at 19, and transitioning into commercial real estate later, and using indexed (low turnover) Mutual Funds instead of conventional equities, then ETF's...
It was usually the school of hard knocks, and mistakes / observances that led me to change my behavior to allow retirement pre-50 (but age 35 would have been very possible with the right planning / luck / ... no elder care...)
Just so the above doesn't sound like a pessimistic recapitulation of the problem, here is one proposed solution. Make retirement planning a required course in high school. Albeit some teenagers will not pay attention, with visions of purchasing their next videogame. However, if the knowledge was available to me at that age, I like to believe that I would have used it.
In addition, give people some autonomy to make their own decisions about monies taken out of their check for "social security". Again, a few people will make poor decisions. However, if people are given knowledge and autonomy I believe they will start saving earlier.
GLS has a good point; educating/mentoring young people about finances is sadly lacking in most school systems. In my job, I commonly found high school graduates -- from good schools -- who had no idea how to balance a checkbook. They were never taught the benefits of tax-sheltered investments and the long-term benefits of compound interest. AP classes are great, but life skills are important, too. If parents can't/don't teach their kids, schools probably need to.
I just opened an IRA this year and I just turned 23 (I procrastinated). I am going to put the maximum away this year and hope to the following year.
Regarding the education/mentoring, I cannot agree more. I was an economics major in college, took financing, accounting, and all sorts of "money" classes. However, I did not learn any of the important finances needed for the real world. Schools need to teach more about credit, interest, retirement, and investing. I did not learn any of these from my college (top ten public college in the nation), but rather from my own research and reading. Like GLS said, we need to start teaching in high school. That's when I read my first book about retirement/investing and it stuck to me like glue. And since I was pretty young when I read that first book, I was more motivated to get a head start. I think most kids would feel the same if they were given the opportunity.
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Planned early, retired early
