The 'don't save for retirement' research that advisors ... disagree with
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Have you heard about the retirement crisis? Of course you have.
The headlines are grim. Millennials and younger generations may be at risk of not collecting full Social Security benefits. Boomers may outlive their 401(k)s. Prospective retirees are working longer than ever.
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That’s why research focused on the life-cycle model, which suggests putting off retirement savings to focus on other early-life expenses, is so jarring. It flies in the face of the seemingly obvious strategy of socking away as much as you can starting in your 20s to reap the benefits of compound interest.
While there were some wealth management professionals who saw the potential, others didn’t pull any punches when talking to Lynnley Browning about the findings.
Do not "fall victim to this ridiculous theory of not saving for retirement while you're young,” said Catherine Valega, a certified financial planner and the founder of Green Bee Advisory in Winchester, Massachusetts.
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2 年As with most financial advice, blanket recommendations are futile. The theory behind not saving young is based far more on what typical people want to do to smooth out their lifestyles rather than what is financially or mathematically best. People should be presented the possibilities and then allowed to choose. This is part of what the FIRE movement is all about. Some people choose to give up more now, so they can live much easier in times when their peers have to save and invest more. Some people will choose to invest more for retirement later but won't do it. These are just a few examples of why the advice to young people not to save now is oversimplified.