The Importance of Savings

Despite my desire to go straight to retirement after graduating from college, the reality of bills convinced me to enter the workforce. After several small jobs, I finally found myself working as a financial advisor with a major brokerage house where I learned an important lesson about retirement: it requires money.


At the age of 24, I was charged with the responsibility of helping clients—many of whom were at least twice my age—determine the wisest way to invest what was often their life’s savings. For some of my clients, retirement was barely five years away, yet their retirement accounts were barely five figures. When I first started, $50,000 seemed like a lot of money to have saved up by the time you were 60 years old. But then I realized that if you had spent the past 40 years working, you’d only saved about $1,000 each year. On top of that, people are living longer. So if you retired at 62, it was very possible that you could still live another 20 years. That $50,000 seemed even smaller.

When it was appropriate, I asked some of my clients what they would have done differently to ensure that they wouldn’t have to spend their retirement doing a job they didn’t love just to make ends meet. The answer was unanimous: save more.

My clients realized that when they were my age, so many other financial issues seemed much more urgent. But with their 20/20 hindsight vision, they know now that preparing for their futures should have been their top priority. As a result, I refuse to make the same mistakes.

Being a part of this younger generation has its disadvantages. A major one is the fact that social security—a primary source of hope for today’s ill-prepared retirees—is likely to be a memory captured in history books by the time we reach retirement. Even company pension plans—once a guaranteed source of compensation to faithful workers—have faded in their reliability.

But the advantages that exist for us are great as well. Today’s twenty-somethings have another 40 years to work hard and save harder. We don’t have to be like our predecessors who saved too late, spent too much, and prepared too little. We have enough time to contribute to our 401ks, max out our IRAs, and invest as aggressively as we feel comfortable and see our savings grow to a respectable level by the time we reach retirement. And many of us can look right at our family trees and see the way that our parents and grandparents have struggled. We can use that as motivation to hold ourselves to a different standard. We especially have an abundance of time to make sure that our descendants are even better prepared by saving now—even if we don’t have children yet. The sooner we start saving and investing, the more money we’ll have in the end. Who can complain about more money?

Your goal doesn’t have to be reaching millionaire status. Maybe you’ll be happy just being comfortable. But, like everything else, comfort does come with a cost. And it isn’t cheap. Plus, it’s likely to be a bill you’ll have to foot yourself.

Small sacrifices now can save big ones later. We have just enough time to jumpstart our futures by setting aside plenty of the money that we earn and watching it grow over the years. Failure to prepare ahead can leave us like many of my former clients: approaching retirement with a dollar and a dream.