By Crystal Kwaw, reporter
Omaha, Neb. – A 19-year-old Omaha resident at this moment in her life isn’t worried about saving up for retirement. Jennifer Sundquist said that she’d like to retire, but it’ll depend on her situation. Sundquist said, her mom once told her, “I don’t have any retirement savings. Either one of you need to support me, or I’m driving off into the woods,” as a joke.
“I’ll probably end up working till I’m not able to work,” Sundquist said. “It’s realistic,” she continued. “I’d have to save 20,000 dollars a year or it’ll run out.” She is convinced social security will run out after the Baby Boomers’ use.
Sundquist has reason to expect social security income to be gone by the time she’s 67, unless new national programs are built in the U.S. to support future elderly populations.
According to an article, The Effects of Collecting Income Taxes on Social Security Benefits by John B. Jones and Yue Li, “Even after a number of reforms, the system’s trust fund is expected to be depleted in 2035.”
Millennials, Generations X, Y and Z are considering multiple options in order to retire with a sustainable supply of capital or other social safety nets.
According to the Social Security Administration website, “On average, retirement beneficiaries receive 40% of their pre-retirement income from Social Security.”
Sundquist said that social security is not enough to live on, because a lot of people now are working to meet their basic needs.
An article titled Shoring Up Social Security by Lisa Gerstner wrote that after the trust fund runs dry, benefits will drop. Younger generation may receive an even lower percentage of benefits.
Assistant professor, Eduardo Cenci, in the Department of Economics at UNO said, when Social Security started in the U.S., the younger population brought money into the system and the smaller, older generation took money out. The population was built like a pyramid, he said. “The pyramid was a very broad base. Now the base is tightening, so it has fewer younger people working and contributing and more older people taking benefits.”
Cenci gives a couple options when the base starts to change: either individuals save more during their lifetime or like Europe and Japan, the U.S. could try to attract more young people.
Another option is to get a 401K, if an employer offers it, so the employer compliments the employee’s savings, Cenci said. Another option is to build a diverse stock fund.
A major obstacle young adults face is not making a lot of money to put aside, Cenci said. “That’s a bummer.”
However, Cenci said, young people have an advantage. “Next to savings, you have something that’s pretty magical, which is the power of accumulation, exponential growth.”
Savings compound interest and snowball, he said. Down the line, those small savings could be much bigger.
“For young people, the takeaway is, start saving early,” he said. “It can grow a lot, over the course of 30 years or more.”
Lastly, Cenci said that a diversified stock fund can weather the storm of a financial crisis.
Sundquist said she plans to rely more on her family. “I guess I’ll follow my mom’s side of the family more – were retirement leads to if your kids can support you.”
Sundquist said she’d like to have a family and invest in her future kids. “I can’t imagine never having kids.”
She said saving is good, “but at this point, if I start saving for retirement, I would not have money to do anything.” She elaborated that she wants to go on vacations and have fun. “I don’t see the point of saving till I’m older to do it all. I want to do it now.”
She said that social programs in the U.S. would have to change, otherwise she might move to a country with better social programs, like universal healthcare, to be able to retire in.
“I think there’s so many options, and they have their good and bad.” Sundquist said.
