Millennials have very little confidence in most major institutions

The best way to combat this is to start contributing immediately. If you start a job make $50k/year and you can afford to contribute $5k/year, then do it. Why? Because then you are effectively making $45k/year and you never get used to having that "extra" $5k.

If you live your life on a $50k salary and you spend all of it every year, then suddenly you decided you want to contribute $5k/year, you have to effectively cut your budget by 10%. That's hard and is intimidating and so most people won't do it.

If you absolutely can't afford to contribute anything when you're making $50k/year then that's fine. But when you get a 5% raise, just contribute that entire raise ($2500). You still have $50k to spend, but you aren't "losing" $2500 by contributing it.

The biggest problem I see in my peers is people who "will just save later. They have too many things they 'need' now." Except your 20s is the best time to save for many reasons.

  1. saving in your 20s allows for more time for compound interest to make you money.

  2. if you have kids, your expenses are only going to go up at you get older, thus making it harder and harder to contribute.

  3. Back to my original point, as you start making more money (say in your 30s), you will most likely begin to start living a more expensive lifestyle - maybe its kids (see 2.) or maybe it's a nicer house, nicer cars, nicer stuff, maybe it's more stuff maybe it's exotic trips, maybe it's whatever. Now you have to "sacrifice" that stuff if you wish to contribute your additional earnings.

But I think the OP has the most important thing and that is that most people just don't realize how much money they need to retire. Too many people think they can retire on $100k and they can save that up between 50 and 65. Except $100k doesn't go that far. For an extreme optimist, it might last 2-3 years, because the principle is so small that you spend it all before it can earn any interest.

I'm no finance manager and I don't know the ins and outs of finance, but I do know basic math. And that is that if you want to be retired for 30-40 years, you need A LOT of money put away to do that.

/r/TrueReddit Thread Parent Link - vox.com