Recently, I enjoyed working with and learning from seventh-graders at Miller Middle School as we discussed financial literacy.
Know Your Dough provided the curriculum – which is designed for fourth, seventh and 11th grades – and volunteers shared their expertise with students. My experience was similar to being a grandparent – so enjoyable while there, but I left with complete admiration for the teachers (parents) who do this every day. Thanks to Mike Bruenig, the teachers and the dedicated volunteers.
My hope is that by starting financial literacy education early, young people can start planning successfully for the future. For the last three years, GOBankingRates has surveyed 8,000 adults across the country, asking the question: “By your best estimate, how much money do you have saved for retirement?” Results were grouped by age and dollars saved.
Numbers have steadily improved over the last three years particularly among women, though men still have higher retirement account balances. The study reported 22 percent of women have more than $200,000 saved compared with 30 percent men. Conversely, 45 percent of women versus 40 percent of men have saved less than $10,000.
Overall, 42 percent surveyed had less than $10,000 saved for retirement. Fifty-seven percent of millennials (18 to 34 years old) and 33 percent of people 55 and older had less than $10,000 saved. A little ray of optimism was that 16 percent of millennials had $200,000 or more saved, but a concern is that only 36 percent of those 55 and older did.
Today, the population older than 50 is expected to live longer than the national average of 76 for men and 81 for women. That, of course, brings up some major concerns. Medical costs are rapidly increasing, and for those on fixed incomes, that will be a major thorn.
We learned that full retirement age to claim Social Security is 66. For each year someone waits past 66, the benefit will increase 8 percent up to age 70. The average Social Security benefit is $1,369 at 66, with the option to be $1,807 if delayed four years. Then why is the vast majority of people beginning to collect Social Security at 62 years of age? This results in a 26 percent decrease in the benefit, so the average check is just more than $1,000. If a third of us have less than $10,000 saved, why would one put further limits on their future long-term income?
Help our young people understand the benefit of saving early – even a small amount. Einstein said that compound interest is the eighth wonder of the world! There is a big difference when one talks of compounding interest on a loan compared with compounding interest on savings.
Young people also need to understand what responsible investing can do for their future.
Wendy Rice is the family and consumer science agent for the La Plata County Extension Office. Reach her at firstname.lastname@example.org or 382-6461.