• Freddie Vernon

Saving Early for Retirement In Spite of FOMO



The early bird gets the worm, right? That’s how the saying goes, and with saving for retirement, nothing could be more true.

I started actively saving for retirement when I was just 14 years old. I’d attended a financial literacy presentation at school that day and came home telling my parents I wanted to open a Roth IRA. Little did I know, I had actually started saving two years prior, when my parents opened a retirement account and had been slowly adding my birthday and Christmas checks from family and friends. Nonetheless, from that moment on, I began saving at every occasion I could find. Naturally, as a freshman in high school, I wasn’t able to contribute as much as a full-time employee, but I recognized the benefits of putting money away early on.

My decision to start saving early arose from the “novel” (to me at the time) concept of compound interest. Compounding makes a sum grow at a faster rate than simple interest, because in addition to earning returns on the money you invest, you also earn returns on those returns over time. Starting to invest small amounts of money early on can benefit you in the long run, as it allows those small increments to snowball on themselves over time. In addition to taking advantage of time being on our side, millennials like myself are perhaps more inclined to start investing now as our cost of living is lower (pre-mortgage, pre-childcare, no tuition, etc.).

Don’t get me wrong, while time is on our side now, it can be tempting to put off saving. Did you know that social media can actually derail one’s savings goals? Yes, FOMO can squash good savings intentions. Especially in this day and age, the constant exposure to friends in exotic destinations, clothed in expensive brands has made even me question what I want to spend my money on. Recently, I contemplated buying an entirely new set of dishware for my apartment to cultivate the same “millennial aesthetic” that I see splashed across my feed. The key question to ask here is “will this benefit me in the long run? Or is this just something I want right now, which will inevitably be replaced by something more exciting in a couple months?” For me, the answer always comes back to my future self. When I reach my retirement age, I’d like to look back and feel confident in the decisions I made to save.

While peer pressures abound, there is good news for millennials. A recent Bankrate survey found that 30% of younger millennial employees, or those who are 18 to 26 years old, boosted their retirement savings contributions in 2017 compared to the previous year. The report said that millennials contributed the most compared to other generations, showing that the trend is growing. This increase can be partly attributed to the growth in the number of employers participating in auto-enrollment and auto-escalation policies in their 401(k) plan. When new employees are automatically defaulted into a plan and the amount being deferred automatically increases each year, employees are less likely to decrease their retirement contributions.

However, there are many ways to start saving for retirement, such as a Traditional or Roth IRA account(offering tax deferral and investment options), 401(k) and 403(b) plans (retirement plans sponsored by a corporation or non-profit) and annuities (tax deferral coupled with varied investment opportunities). With all of these choices, everyone should have an option that feels right for them.

Regardless if it’s $10 or $100 a week, putting money away now will come to benefit you in the long run. So, what are you waiting for?


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