Why should teens care about retirement savings?

by Brenda Campbell, President and CEO, SecureFutures

Talk to a teen about retirement savings and you’ll probably be met with a blank stare.

Most teens haven’t even decided on what they want to do for a living, let alone started planning for when they’re done working! There are so many exciting things to spend money on now that have an immediate impact – why would they prioritize goals that lie many decades in the future?

According to a recent PwC survey of over 5,000 millennials about personal finances, only 27% sought help on retirement, and only 36% had a retirement account. Also, more than 20% of the millenials with retirement accounts had taken out loans or hardship withdrawals in the past year.

That concerns me, and it should concern you too. I want the next generation to have the knowledge and tools to build financial stability, both now and in the future, and that includes starting early with retirement savings. The question is: how do we make that happen?

In our programs at SecureFutures, it’s about two things: making it real and building habits.

First, making it real.

Money Path is an especially powerful tool for showing teens, with clear numbers and visuals, exactly what it can mean for their future to start saving for retirement now. We make the power of compound interest more than just a theory. Teens can try out different scenarios, changing their career choices, savings goals, and debt, and watch the bright green line on the retirement savings graph go up in real time.

Second, building habits.

The importance of developing healthy financial habits is emphasized across every one of our programs. Pay yourself first! Know the difference between needs and wants! That’s why the longitudinal study measuring the long-term behavioral impact of our Money Coach program is so important: we want to know that teens aren’t just changing their financial choices in the short term, but developing firm habits that will carry them throughout their adult lives.

Putting a few dollars aside from every paycheck towards retirement, starting as a teen, is a simple habit that will make a profound difference. I’m so grateful that we have the opportunity to make an impact on teens’ lives, not just now, but long into their bright futures.