Spare a thought for the fledgling savings of Generation Y, the members of population who have entered the workforce within the past 10 years or so.
Many are still carrying heavy student debts and are the younger members of a society that tends to be heavy users of credit cards.
Journalist Mark Scott, writing in Bloomberg Newsweek, addresses the challenge of encouraging Generation Y to develop a savings habit for life.
In his article – headed Gen Y’s Empty Piggy Bank – Scott includes a telling interview with a 27-year-old who is having trouble getting into an investment frame of mind.
“Just the idea of [saving for retirement] feels overwhelming,” she tells Scott. “My fear of doing something wrong, or not doing enough, sort of paralyses me.”
Scott also quotes US-based chairman and chief executive of the Vanguard Group Bill McNabb about how the fund manager is testing ways to more effectively reach younger investors, including with more blogs and a Facebook page.
No matter how the message is carried, McNabb says it is basically the same: Become a disciplined saver as earlier as possible in life. And he suggests emphasising this to Generation Y by adding the words, “I am not kidding”.
In Australia, the biggest beneficiaries of compulsory super are, of course, those who will receive SG contributions throughout their working lives.
Yet, our compulsory super system takes no account of interrupted working lives – caused by bringing up families, perhaps unexpected unemployment or perhaps having to retire early because of poor health.
There are plenty of powerful reasons, including the possibility of interrupted careers, to begin voluntarily savings for retirement as soon as possible – even for a person who is not expecting to retire for another 40 years.