Viewpoint: Pinch pennies, save for golden years

Greg DeVries | Editor in Chief
Greg DeVries | Editor in Chief
Retirement is just something our parents have to worry about. After all, we’re a good 45 years away from our golden years. But according to the U.S. Department of Labor and USA Today, the statistics about retirement are daunting enough to raise my 22-year-old eyebrows.

According to the Department of Labor, about half of Americans have calculated how much they need to save for retirement. In 2012, 30 percent of workers in private industry with access to a retirement plan chose not to participate. Apparently a good chunk of people with real jobs don’t think about retirement either.

USA Today reported that 58 percent of workers 60 and older are delaying retirement, and many people are doing so because of financial reasons.

Imagine sitting at your desk at work when you’re 60 years old. Your best years are behind you at this point. Now add the thought of not having enough money to live the rest of your life. Unforeseen costs such as medical bills, car repairs, annoying children asking for help paying off student loans and more medical bills will quickly drain the average 401(k). If that doesn’t scare you into rethinking your future, then I don’t know what will.

My point is that all of us should start saving for retirement within a few years of graduating and getting a job. I know it will be tempting to throw a lot of that much-anticipated first paycheck into things such as a trip to the Caribbean, a sports car that you just saw on Top Gear or expensive nights out on the town, but you’ve got to be smart.

If you’re lucky, your employer will offer some sort of retirement savings plan, such as a 401(k). If nothing else, throw your vacation money at this. According to the Department of labor, “Your taxes will be lower, your company may kick in more, and automatic deductions make it easy. Over time, compound interest and tax deferrals make a big difference in the amount you will accumulate. Find out about your plan.”

But even blindly throwing money into an account can be dangerous. Like everything else, there’s a right and a wrong way to do it. A few weeks ago, I asked my dad how much I should save for retirement. I got the vague and less-than-helpful “save as much as you can.”

What am I supposed to do with that? Let’s say my career takes off financially like I only dream it can. Should I find a run-down apartment that charges $250 each month for rent while living on Ramen Noodles and Spam? Should I also get a flip phone all in the name of saving as much as I can for retirement?

Luckily, that’s a bit extreme. A general rule in the American financial sphere is to save between 10 and 15 percent of your income each year. According to Fidelity Investments, you should save eight times your final year’s salary, but there are a number of variables that can change that.

Unfortunately, the overall formula that Fidelity sets forth is so complicated and full of unknowns, such as life expectancy, that it provides little more than basic guidelines for people our age.
This all sounds frightening, but I don’t want to live the final years of my life in fear. I want to enjoy my retirement.

I’d like to think my retirement will look a lot like my current weekends without homework: I’ll get up when I wake up, eat cereal out of a salad bowl, play Nintendo 64, cheer for the Houston Rockets and enjoy my responsibility-free life. Sailing the world might be for some people, but I’ll take the life where I don’t have to look presentable all day.

So what’s a 20-something to do? Well, we can work out the details later. Maybe when I’m approaching 40 I’ll start to figure out a specific dollar amount that I will need. Until then, I’ll stick to the “throw money at it” solution.

Greg DeVries is a senior journalism major from Houston. He is the editor-in-chief for The Lariat.