I came across this piece yesterday, bemoaning the plight of new college graduates who can expect to retire around age 73. Let's make no bones about it, student loans are no fun to pay back (but better than credit card debt). Regardless, the idea that retirement is unattainable until a later age for today's graduates is not true, just an excuse to not save. Especially when considering that new graduates have one of the most important aspects of good, solid investing on their side - time.
Let's consider a few scenarios:
Save $100 per month
- It's $25 per week - a dinner out or a night at the bar. Could you spare $25 a week, even on a modest salary? Start right after graduation, and continue until age 65 and what do you end up with: $342,000 (assuming a 7.5% average annual return). We're also assuming that at no point do you ever increase that contribution. If you did, it would certainly increase the bottom line.
Save 10% of your Salary
- Let's say you leave college and your first job pays you $30,000 per year. I know, it's not a lot. Even harder to find a way to save 10% of that number. Does it become any easier when considering that saving $3,000 per year until age 65 leaves you with $857,000 (assuming 7.5% average annual return)? It should, and remember - that is without increasing your contributions even once!
It's not easy being a new college graduate. Jobs are hard to find, loans are no fun to pay back. But saving is a choice that we make, and just because it's not easy doesn't mean it won't someday pay off, literally. There's no better time to start than now.
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).