Memo to Business Owners, Universities and Parents: Help Alleviate the Savings Crisis in This Country
Congress has been meeting to address a growing crisis in this country, the fact that Americans don’t save much money. According to the AARP only one in five baby boomers has more than $25,000 in assets. Only 40% of the people eligible to contribute to a 401k plan do so. With the recent headlines about the shakiness of Social Security this issue becomes even more important. Congress is considering a number of different measures: Increasing contributions to retirement plans, tax incentives, etc. All of this is great but there is one change that could be made right away that I think would make a huge difference.
Financial Literacy in Schools
Our schools do a great job of preparing us to get a job. Nobody teaches us what to do with our paycheck. Financial literacy is the biggest gap in our education system. College students are bombarded by offers for credit cards but nobody teaches them how to use credit wisely. I believe that a lack of financial literacy is the main reason why Americans don’t save. Nobody told them that they should save money and nobody ever told them how to save money. I think we all agree that the average 21 year old could save at least $5 day. If they where able to do that over their working lives they could retire with $1.2 million dollars. I wish someone had told me this when I was 21.
Financial Literacy in the Workplace
Once we get a job our employer expects us to decide whether or not to enroll in a 401k and tells us to pick from a menu of mutual funds. Many people don’t even know what a mutual fund is, or how to pick one. Less than half of large employers offer financial education to their employees, and none require participation. I was watching the Suze Orman show the other day and a woman stood up to ask a question. She had left her job and wanted to roll her 401k over to her new employer. She had her old employer send her the check directly and she had held it for 90 days. Suze had to tell her that it was too late to put it into the 401k and that she would have to pay taxes and penalties. Two things about this struck me. First, someone should have told her how to roll over a 401k plan. Second, this woman was probably in her 30’s and she had only saved $900 in her 401k. Somebody should have taught her the importance of saving money in a 401k plan.
Parents Can Teach Financial Literacy
Parents can help too. Lets assume you child is 15 and is able to get a summer job earning $3,000/year until they are 19. That qualifies him or her to contribute to a Roth IRA. Now, they don’t have to contribute what they earned, you or a grandparent can make the contribution for them. $3,000/year contributed for just four years to a Roth IRA for your child could equal $1.1 million dollars by the time they retire. I wish someone had told me this when I was 15. Amassing a seven figure net worth is not difficult, it just takes time, something your children have in abundance.
Financial Literacy in Schools
Our schools do a great job of preparing us to get a job. Nobody teaches us what to do with our paycheck. Financial literacy is the biggest gap in our education system. College students are bombarded by offers for credit cards but nobody teaches them how to use credit wisely. I believe that a lack of financial literacy is the main reason why Americans don’t save. Nobody told them that they should save money and nobody ever told them how to save money. I think we all agree that the average 21 year old could save at least $5 day. If they where able to do that over their working lives they could retire with $1.2 million dollars. I wish someone had told me this when I was 21.
Financial Literacy in the Workplace
Once we get a job our employer expects us to decide whether or not to enroll in a 401k and tells us to pick from a menu of mutual funds. Many people don’t even know what a mutual fund is, or how to pick one. Less than half of large employers offer financial education to their employees, and none require participation. I was watching the Suze Orman show the other day and a woman stood up to ask a question. She had left her job and wanted to roll her 401k over to her new employer. She had her old employer send her the check directly and she had held it for 90 days. Suze had to tell her that it was too late to put it into the 401k and that she would have to pay taxes and penalties. Two things about this struck me. First, someone should have told her how to roll over a 401k plan. Second, this woman was probably in her 30’s and she had only saved $900 in her 401k. Somebody should have taught her the importance of saving money in a 401k plan.
Parents Can Teach Financial Literacy
Parents can help too. Lets assume you child is 15 and is able to get a summer job earning $3,000/year until they are 19. That qualifies him or her to contribute to a Roth IRA. Now, they don’t have to contribute what they earned, you or a grandparent can make the contribution for them. $3,000/year contributed for just four years to a Roth IRA for your child could equal $1.1 million dollars by the time they retire. I wish someone had told me this when I was 15. Amassing a seven figure net worth is not difficult, it just takes time, something your children have in abundance.
Congress has been meeting to address a growing crisis in this country, the fact that Americans don’t save much money. According to the AARP only one in five baby boomers has more than $25,000 in assets. Only 40% of the people eligible to contribute to a 401k plan do so. With the recent headlines about the shakiness of Social Security this issue becomes even more important. Congress is considering a number of different measures: Increasing contributions to retirement plans, tax incentives, etc. All of this is great but there is one change that could be made right away that I think would make a huge difference.
Financial Literacy in Schools
Our schools do a great job of preparing us to get a job. Nobody teaches us what to do with our paycheck. Financial literacy is the biggest gap in our education system. College students are bombarded by offers for credit cards but nobody teaches them how to use credit wisely. I believe that a lack of financial literacy is the main reason why Americans don’t save. Nobody told them that they should save money and nobody ever told them how to save money. I think we all agree that the average 21 year old could save at least $5 day. If they where able to do that over their working lives they could retire with $1.2 million dollars. I wish someone had told me this when I was 21.
Financial Literacy in the Workplace
Once we get a job our employer expects us to decide whether or not to enroll in a 401k and tells us to pick from a menu of mutual funds. Many people don’t even know what a mutual fund is, or how to pick one. Less than half of large employers offer financial education to their employees, and none require participation. I was watching the Suze Orman show the other day and a woman stood up to ask a question. She had left her job and wanted to roll her 401k over to her new employer. She had her old employer send her the check directly and she had held it for 90 days. Suze had to tell her that it was too late to put it into the 401k and that she would have to pay taxes and penalties. Two things about this struck me. First, someone should have told her how to roll over a 401k plan. Second, this woman was probably in her 30’s and she had only saved $900 in her 401k. Somebody should have taught her the importance of saving money in a 401k plan.
Parents Can Teach Financial Literacy
Parents can help too. Lets assume you child is 15 and is able to get a summer job earning $3,000/year until they are 19. That qualifies him or her to contribute to a Roth IRA. Now, they don’t have to contribute what they earned, you or a grandparent can make the contribution for them. $3,000/year contributed for just four years to a Roth IRA for your child could equal $1.1 million dollars by the time they retire. I wish someone had told me this when I was 15. Amassing a seven figure net worth is not difficult, it just takes time, something your children have in abundance.
Financial Literacy in Schools
Our schools do a great job of preparing us to get a job. Nobody teaches us what to do with our paycheck. Financial literacy is the biggest gap in our education system. College students are bombarded by offers for credit cards but nobody teaches them how to use credit wisely. I believe that a lack of financial literacy is the main reason why Americans don’t save. Nobody told them that they should save money and nobody ever told them how to save money. I think we all agree that the average 21 year old could save at least $5 day. If they where able to do that over their working lives they could retire with $1.2 million dollars. I wish someone had told me this when I was 21.
Financial Literacy in the Workplace
Once we get a job our employer expects us to decide whether or not to enroll in a 401k and tells us to pick from a menu of mutual funds. Many people don’t even know what a mutual fund is, or how to pick one. Less than half of large employers offer financial education to their employees, and none require participation. I was watching the Suze Orman show the other day and a woman stood up to ask a question. She had left her job and wanted to roll her 401k over to her new employer. She had her old employer send her the check directly and she had held it for 90 days. Suze had to tell her that it was too late to put it into the 401k and that she would have to pay taxes and penalties. Two things about this struck me. First, someone should have told her how to roll over a 401k plan. Second, this woman was probably in her 30’s and she had only saved $900 in her 401k. Somebody should have taught her the importance of saving money in a 401k plan.
Parents Can Teach Financial Literacy
Parents can help too. Lets assume you child is 15 and is able to get a summer job earning $3,000/year until they are 19. That qualifies him or her to contribute to a Roth IRA. Now, they don’t have to contribute what they earned, you or a grandparent can make the contribution for them. $3,000/year contributed for just four years to a Roth IRA for your child could equal $1.1 million dollars by the time they retire. I wish someone had told me this when I was 15. Amassing a seven figure net worth is not difficult, it just takes time, something your children have in abundance.
posted by zzzzzzzzzzz at
11:35 PM
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