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Last week I was asked to present high school students with information on women in the workforce and saving for retirement. One of my major goals was to instill the value of starting early. But I had the sense, maybe because I’m not too far from high school age myself, that my slides about compound interest and Roth IRAs would be particularly boring.

Rather than watch their eyes glaze over I added a new slide: A personal story about my mother, her life course, marital history and saving behavior. I wasn’t saying anything novel but by explaining compound interest this way I kept everyone’s attention. So, I encourage you to share this with the young people in your life and reflect on what it really means to save early and save often.

(For simplicity, the interest rate at all time points is 5%. In actuality, she gained more during her earlier life and has lost a lot during the recent recession).

This figure tells us two stories. Let’s begin with the story in blue, which is what really happened. At age 21, my mom got married and started working a new job. She was so excited to finally have her own money and be able to buy all the clothes she wanted and decorate their new house. My dad, however, didn’t think this was a good plan and told her, “Save your money! We both should be saving now for our future.” Reluctantly she saved, putting $2,000 away each year for her retirement. By the time her first child was born (me!) she had saved up $20,000.

In her 30’s she had another baby and raised my sister and me. She was not working or saving at this time but her $20,000 continued to grow. By 42 her marriage was on the rocks and she became divorced. Now, all that planning for her future had to be done alone. She spent a couple years searching for a new job and struggling with the change. Even so, the savings from her 20’s continued to grow. By 45 she found a new job and started her career over. She was getting nervous about her retirement savings and started putting away $5,000 a year. The savings from her new job were added the nice nest egg she had accumulated while she wasn’t working. The final blue bar shows an optimistic future where she continues to save each year, the economy improves and hopefully she reaches over $300,000 by retirement.

What is the reality of saving? Well, you can’t always save when you want to or need to and it’s hard to predict the future. For example, my mom couldn’t predict that we’d be in an economic recession right at the time most people her age start saving for retirement. The green bars show us what this path would look like for her. Nothing in her life has changed except that she didn’t save in her 20’s. Instead she chose to ignore my dad’s suggestion and spend her money on clothes, new furniture and all the other things she wanted. The message is clear: Saving early, even if it’s just a little, makes a huge difference for your future.

I can tell you honestly that most of my mom’s friends are extremely worried about their futures. They are in their 50’s, starting to save now and having a difficult time. She knows, though she hates to admit it, my dad was right.


During a Qualitative Research Methods course, I conducted a focus group on young adults discussing how they view retirement and what, if anything, are they doing about it. Being interested in the topic but finding little besides opinions out there, I wanted to ask the source. My findings are not generalizable by any means, however my participants did bring up a reason for not saving no one has seemed to mention yet.

Financial planners and economists out there are screaming at young adults. Timing is everything, You need a Roth IRA, and Research urges you to start now. And people speculate as to why they are not listening. They have student loans, they are irresponsible, they only care about consumption in the present, they have other financial priorities such as a house, or they are anxious about Social Security and whether or not they can trust our government. Yes, all of these topics did come up in my conversation with the group, but so did something else. Intimidation.

75% of the individuals I spoke with are very intimidated by the thought of a retirement account or a 401(k). They know it is a good idea and feel foolish for “not speaking the the HR guy,” but frankly they are confused and scared. This is their money, what little they have, and they don’t know where to put it. They are listening to the professionals yelling at them to save and are whispering back, “But what does this even mean? What am I getting into?” Why this is interesting to me is because no one is talking about it. Not all young adults have the opportunity to put money in a 401(k), but many young adults who have this option feel uneducated. Think about how many of them were raised, taught to arm themselves with knowledge when making a decision, weigh all the options, shoot for the best and accept nothing less. It’s no wonder they feel they cannot make this significant decision about their future when they are missing information.

It is sad to me that financial education, something that impacts every American’s life, has been cut from the school systems. If not cut, it is an elective course or the “lower-level” math. We teach our children about history, geography, biology, literature, chemistry, and calculus. Proper knowledge of these will get you into college and allow you to acquire a better paying job, but none of these subjects will be a part of every American’s future. None of these subjects affect their life like having good financial knowledge. Too bad they don’t get it, and so we leave them uninformed and intimidated.

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