First Person: My Children Started Saving for Retirement at 18

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As soon as my children had earned income at age 18, they didn't move out of the house, but they did start saving for retirement. Some financial experts say Millennials such as my 19 and 20-year-old children are going to leave older generations in the dust when it comes to being prepared for retirement. A recent article by Reuters suggests Millennials are turning out to be better savers than older people. The article cited a TD Ameritrade survey that showed members of Gen-Y began saving for retirement by an average age of 24 compared to my Generation X that started at age 28. Baby boomers didn't start socking money away for retirement until an average age of 35. Perhaps opening a retirement account is the new rite of passage for the younger generation that was shaped by the Great Recession. My sons had Roth IRA accounts before they had cars.

Treating a job as a privilege

I have noticed my sons treat employment as a privilege as opposed to a burden. The unemployment rate for people ages 20 to 24 was 12.5 percent this past month, which was higher than the national average of 7.3 percent. One of my sons beat out about 20 candidates to land his position. According to the Reuter's article, Gen-Yers have the attitudes of the Depression-era generation. If my grandparents were alive today, I think they would be proud of their great grandsons for being frugal and working hard. My grandparents would think it's great my sons rather be in a multi-generational household than go into debt trying to pay rent or a mortgage they can't yet afford.

Making savings automatic

According to the TD Ameritrade study, 56 percent of the Millennials make regular, automatic 401(k) contributions compared to just 46 percent of baby boomers. When my sons are given the chance to contribute to a 401(k), they plan to do so. My son with a steady job has money automatically withdrawn from checking and moved into his Roth IRA account through a discount brokerage firm. Because he is still trying to save up money for other necessities, I encourage him to save 5 percent. He plans to increase his savings by 1 percent every year until his saving rate reaches 20 percent.

Following the Gen-Z path

I've talked to my sons about how I started saving for retirement in my 20s. The average Gen-Xer starts saving for retirement at age 28, which is around the time I started. Because I started early, I was able to build up a nest egg of about $100,000 before the company I worked for sold to another company. I don't worry as much about having to make catch-up retirement contributions or being broke in retirement. My money will grow since I set it up for the dividends to be reinvested over time. My sons started saving for retirement a decade sooner than I did, which means they will be less dependent on Social Security. They can weather unpredictable economic problems and personal financial emergencies.

In my opinion, it's never to early to contribute to retirement. At the same time, I regret saving too much for retirement in a 401(k) and not enough for my first home purchase. By using Roth IRA accounts, my sons have a lot more flexibility since the money they put in may be withdrawn without penalty or taxes. I'm proud of them for being early retirement savers. Perhaps they will become Roth multi-millionaires by age 50.

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