DO YOU NEED TO BUY STOCKS TO BE ABLE TO RETIRE COMFORTABLY?
I came across an article online that said that today’s 20 to 30 year olds may need as much as two million dollars to be able to retire with the lifestyle they desire. That’s $2,000,000! Now that number is hopefully too high but it serves to make it clear that a tough road is ahead for all young people as they go through life working and saving towards retirement.
The reason for that big number is of course inflation because in the next 40 to 50 years, we will probably be seeing a lot of it. The the government is in such tremendous debt that it will undoubtedly continue to print money at an alarming pace and that will lead to inflation.
It is going to be very hard for this generation to retire (maybe at all) as there is no such thing as pensions anymore. When my father retired he got a 15 year pension of guaranteed money. But hardly any companies do that these days and pensions have been replaced with 401K’s. Employers usually don’t pay very much into 401K’s and it is up to the employees to make sure they contribute the maximum throughout their working lives or they will be losing out. Unfortunately, young workers are less apt to understand the need to fund their 401K’s all the way through and this will hurt them when they get older.
Another thing that may delay retirement is the age at which you can become eligible to receive Social Security keeps going up. If it is still around in 40 years (and it may not be) who knows what age you will have to be to get it? 80? 85?
Also hurting anyone who wants to save and invest are interest rates which are pretty much equal to zero. I looked at one of my bank CD’s the other day that is about to mature and realized the interest rate I am getting is .3 of a percent. That is .003 which in my book is the same as nothing. How can anyone accumulate money at that rate? How can kids who are in their 20′s and 30′s today ever get enough saved where they can retire and not have to work?
In other words, there are some BIG challenges ahead of all “youngsters” today who have a goal of someday retiring at a decent age. For many of them, they may find no other option than to keep working through their 60′s and into their 70′s. It is very sad that this is what they face.
In light of this, investing early and often becomes much more important to this generation and unfortunately, the only place they might be able to get a decent return is in the stock market. I say “unfortunately” because there is no doubt that when you buy stocks, you incur risk. Should younger people have all their savings in the stock market just because that is the only place where they might be able to get any kind of return?
When I was in my 20′s and 30′s I did have most of my money in stocks but I was comfortable with the risk. I am less risk averse (or was) than many and I was able to sleep at well at night and not worry. But not everyone has the mindset to be able to put all their savings in stocks knowing that they could lose some or all of it. Many people would rather put their money in safe, interest bearing vehicles and sleep well at night. But right now those “interest bearing” vehicles aren’t bearing any interest so what does a person do who wants options?
Unfortunately I really don’t have any answers other than to say that it is more important than ever to learn about the stock market and to get involved buying stocks. Nothing is guaranteed but over a 20 to 40 year time horizon, the chances of making money with a solid stock buying strategy are still great. Kids today need to buckle down and sacrifice as much of their disposable income as they can and put it into stocks and maybe some into gold. They need to learn about how to save and preserve what money they have and become as financially educated as possible. Their retirement may depend on it.
