Plan for Retirement When You Are Young

One of my in-laws grew up wealthy. She once told me that I was lucky to be able to retire so young at age 55. Unsurprised by her cluelessness, I just smiled. Luck is always a factor in life, but it isn’t usually the main factor in business success or accumulation of wealth.

I grew up in blue-collar, hard hat neighborhoods in New York. My father was an immigrant, as were all my grandparents. One grandfather was a tailor, the other a construction worker. They came here to live the American dream and worked very hard…much harder than most native born Americans. I’m proud of them.

I had a large extended family with 13 aunts and uncles, plus their spouses, and dozens of cousins. I was the first one to attend college, attending GSU at night all the way through my master’s degree.

I had two big things going for me: motivated parents who wanted upward mobility and a supportive wife (I got married at 18). That’s not true for many Americans who come from unstable home situations.

I was also fortunate to have good friends along the way to my ultimate job as a SVP for a corporation. One was a young, well-connected Washington insider. He held high level jobs with a prominent Senator and the Reagan administration, becoming a highly paid lobbyist.

After a DC meeting decades ago, he offered me a lift to my hotel. I expected to be riding in a Porsche or a Bentley, which were what my bosses drove. He picked me up in an old, 4-cylinder, small Chevy truck. I asked him why he drove that truck when he could easily afford a Benz. He told me that he planned to retire in 15 years at 55 and get a doctorate.

I was astounded. He and I were the same age; both of us came from humble beginnings. We both made good money, but I figured that I would work all my life. So, I asked him how he intended to retire so young.

He answered: make savings a top priority. He was putting up 20%+ of his income and had been for many years. I began to do the same, retiring at 55, as did he. Both of us stayed active. In my case, I was a County Commissioner for 8 years, served on several boards and had 1900 columns printed in papers and magazines nationwide.

I have many friends and relatives who have not been as fortunate, making different retirement planning decisions (or, more aptly, not making any decisions at all in their youth and middle age) … and then regretting them when they were seniors. They discovered too late that Social Security alone will not give someone a comfortable retirement. 

Lower- and middle-income parents should talk to their children now about what it takes for the average person to succeed in America: a good education in a subject area where there are job opportunities, along with drive. Be honest with them. Yes, one must follow their passion, but not at the expense of being unable to pay the bills.

Colleges should be having mandatory courses in long-term investing and saving for retirement. It should be drilled into students’ heads at an early age. Yes, they will be resistant, but at a minimum they need to be presented with the facts.

I’m not talking about speculation. The market goes down, then it goes up, then it goes down, then it goes up. But overall, the stock market rises substantially over time. In the last 20 years, the S&P 500 has had a total return of 454%, per Yahoo Finance. If students are shown how wealth increases via a stock market index fund, that’s a good start.

As of 2022, 39% of Americans will not have enough savings to permit them to live without substantially cutting expenses in retirement (https://crr.bc.edu/do-we-have-a-retirement-crisis/ ). Long-term career and financial planning is the key to a comfortable retirement. Individuals and families should be aware of this fact and start planning now.