How To Help Young Workers Become Retirement Savers

How To Help Young Workers Become Retirement Savers

by Julie Jason on Dec 19, 2018

This feature originally appeared on

Are you the type of person who likes to help others? Retirement security is on the minds of many. A few months ago, we celebrated Retirement Security Week, established by the Senate to shine a light on the need to save for retirement. The Senate is doing its job, but that’s not enough. If you are an "influencer," you can play an important role in advocating for change. Here's how.

Engaging young workers - Just how do young people starting a career know that they are losing time and leverage the longer they wait to start saving for retirement?

It’s all math - The math of compounding is the big lesson that needs to be learned early in one’s career. Think back to your own introduction to this important concept. When did you learn that time gives you leverage?

By example, someone who waits to age 45 to start to save for retirement will need much more capital to accomplish the same result as a 25 year old. Again, the reason is simply the math of compounding.

Assume an individual who is 25 wants to retire at 65. Another is age 45; he also wants to retire at 65. The 25 year old has a 40 year horizon; the 45 year old has a 20 year horizon.

Assume each invests $5,000 a year over 20 years for a total of $100,000. The 45 year old’s investment at the end of 20 years is worth about $200,000 assuming a rate of return of 6%.

The 25 year old’s result is far different even though the investment is identical ($5,000 a year over 20 years for a total of $100,000). The same investment with the same 6% return is worth three times more (about $600,000) when the 25 year old reaches age 65.


Time is the essential ingredient - The difference in results is nothing other than time horizon.

“MarketMath” - Leveraging your time horizon is a concept I call "MarketMath." Who can benefit the most?  Younger workers who have access to company retirement plans. If they only knew how simple it is to take advantage of their youth. Perhaps you can make a difference in their retirement security by sharing this idea. We are all in a position to help.

Here’s your script - If you wait to start investing for retirement (no matter the reason), you’ll lose the leverage that time gives you. You’ll never be your age again. You don’t want to regret, as many retirees do, that they didn’t start saving early enough.

Getting pushback? - Some will say they need to pay off student loans first or buy a car. Not good enough. The solution: establish multiple goals for your cash. It’s not all or nothing. It’s a matter of setting priorities, keeping in mind that if you lose time, that’s not something that you can find later.

Remember this - One out of two U.S. households are at risk of not having enough money to maintain their living standards in retirement, according to the National Retirement Risk Index published by the Center for Retirement Research at Boston College.

Are you an influencer? - Influencers who want a unique way to help will want to check out the 401(k) Champion Award. The awards shine a light on 401(k) participants who live financially literate lives, by optimizing their 401(k)s and encouraging others to live that way as well. To nominate: go to by January 31, 2019.