How to get young people to save for retirement when they’re planning for the end of the world

Guest Post by Kari Paul

Many young people today think civilization may not exist when they’re of retirement age. Here are ways to get them to invest for the future.

Lori Rodriguez, a 27-year-old communications professional in New York City, is not saving for retirement, and it isn’t necessarily because she can’t afford to — it’s because she doesn’t expect it to matter.

Like many people her age, Rodriguez believes climate change will have catastrophic effects on our planet. Some 88% of millennials — a higher percentage than any other age group — accept that climate change is happening, and 69% say it will impact them in their lifetimes. Engulfed in a constant barrage of depressing news stories, many young people are skeptical about saving for an uncertain future.

“I want to hope for the best and plan for a future that is stable and secure, but, when I look at current events and at the world we are predicting, I do not see how things could not be chaotic in 50 years,” Rodriguez says. “The weather systems are already off, and I don’t think it’s hyperbolic to be a little apocalyptic.”

Mental-health issues affecting young adults and adolescents in the U.S. have increased significantly in the past decade, a study published in March in the Journal of Abnormal Psychology found. The number of individuals between the ages of 18 and 25 reporting symptoms of major depression increased 52% from 2005 to 2017, while older adults did not experience any increase in psychological stress at this time, and some age groups even saw decreases. Study author Jean Twenge says this may be attributed to the increased use of digital media, which has changed modes of interaction enough to impact social lives and communication. Millennials are also said to suffer from “eco-anxiety,” according to a 2018 report from the American Psychological Association, with 72% saying their emotional well-being is affected by the inevitability of climate change, compared with just 57% of people over the age of 45.

Meanwhile, two-thirds of millennials — defined by Pew as the generation born between 1981 and 1996 — have nothing saved for retirement, according to the National Institute on Retirement Security. The millennials who are saving had an average balance of $25,500 and were contributing 7.3% of their paychecks as of the second quarter of 2018, figures from Fidelity showed. While most millennials say they are not saving because they simply can’t afford to, for others it’s about the feeling that they may not have a future to save for, says Matt Fellowes, chief executive officer of United Income, an online retirement investment platform based in Washington, D.C.

“There is a certain fatalism in this population relative to more recent generations,” Fellowes says. “Psychologically, this population has had more shocks to expectations about their futures than past generations. From a perception point of view, I hear a lot of cynicism about the ability to build retirement savings or whether they will be able to retire at all.”

Climate change may also have direct, and devastating, effects on the finances of young people, an August 2016 study from environmental advocacy organization NextGen Climate found. The median 21-year-old college graduate in the class of 2015 will lose over $126,000 in income over her lifetime to climate-change-induced costs and $187,000 in wealth if that income were to have been saved and invested, the study, titled “The Price Tag of Being Young,” found.

A perennial problem

From the chaos of World War II to the draft for the Vietnam War and the looming threat of nuclear conflict during the Cold War, every generation has its own source of doubt about the future, but millennials are uniquely poised to distrust systems propping up the concept of retirement, says Brad Klontz, 48, associate professor of practice at the Financial Psychology Institute. The current generation of young people witnessed the dot-com bubble burst after the turn of the millennium, the terrorist attacks of Sept. 11 and the wars that followed, and the stock-market crash in 2008 and the associated housing crisis.

“What happened in 2008 was an incredible financial flashpoint for millennials,” he says. “After watching their parents lose a job or a home, millennials are contending with a deep distrust for financial institutions and the stock market. That brings out catastrophic thinking, because they’ve already seen a catastrophe.”

Although hard data show that, in practice, many young people are still investing at a steady rate, surveys show they remain skeptical. Rodriguez says she has grown increasingly wary of capitalism and has become convinced we are witnessing its final stages. She’s not alone: The number of millennials who view capitalism positively fell from 68% in 2010 to just 45% in 2017.

“I was in college when the financial collapse happened, and I remember the intense dread and panic around me as people who played by the rules of the system and did everything right lost all of their savings,” she says. “What will prevent that from happening again? The system doesn’t work.”

But this outlook has not made her financially reckless: Rodriguez carries no credit-card debt, faithfully pays the minimum on her student loans each month and has a credit score of 750. She also keeps six months of living costs in a savings account in case of emergency.

“I hope for the best and prepare for the worst,” she says. “But I can’t imagine what my life will look like when I’m retirement age. It’s hard to plan for a future and have faith that money will mean anything anymore.”

How to get millennials to save

Of course, personal-finance experts do not recommend avoiding saving for retirement because of the possibility of a climate catastrophe. And Fellowes says United Income research shows that, when it comes to retirement, millennials respond most favorably to peer pressure.

“A good solution to help people save is to tell them what people in their income profile are doing, essentially asking, what’s wrong with you? Your peers are doing this, and you should do better,” he says. “Of course, we wouldn’t use that wording.”

While he considers climate-change concerns valid, some millennials may be using them as an excuse not to save, the Financial Psychology Institute’s Klontz says. Setting aside money for the future rather than using it in the moment is fundamentally difficult for human beings, he says, as a tendency to avoid thinking about the future is hard-wired into our brains. In hunter-gatherer societies, people only saved as much as they could carry to the next location.

“Saving money goes against our natural wiring in terms of how our brains have developed over the years,” Klontz says. “It’s difficult to save for the future because it comes at a literal cost. To save, you have to overcome this fear with some relatively intense alternative emotions.”

To override the natural resistance to saving for things like retirement, people have to home in on positive visions of the future, studies show — or extremely negative ones, Klontz says.

People who create specific visions of what they want from retirement — where they will live, whom they will spend time with, how they hope to spend time — are more likely to save, a 2011 Stanford University study found. If one’s vision of the future is hopeless and bleak, saving will be psychologically very difficult, Klontz says.

“With a depressed view of a terrible future, of course you won’t want to save — who would?” he asks. “The future might be terrible. But chances are it won’t be. Chances are, the world will still exist in 40 years, and you will need money to meet your needs.”

Alternatively, Klontz offers, young people can be scared into saving money. Because one thing that’s worse than not having a future is not being prepared for a future that comes to pass anyway.

Changes already being made

Many people are already making major adjustments to traditional life plans to account for future climate-change effects. Dan Sheehan, a 28-year-old writer in Los Angeles, says he has chosen not to have children or a family, a decision that has also contributed to his not saving for retirement. Some 30% of people who have chosen not to have children have done so due to climate concerns, according to a 2018 report by the New York Times.

“For me, one of the main reasons to save for retirement is [that one expects to have] a family and a full life at 80,” he says. “But the more you read the more you feel like, unless something very radically changes soon, it’s going to be downright cruel to have children in the future.”

Human beings only have 12 years to make meaningful adjustments to our environment if we are to roll back an otherwise inevitable climate-change-related disaster, the world’s top scientists concluded in a report released by the UN Intergovernmental Panel on Climate Change (IPCC) in December. If urgent and unprecedented changes are not made while that 12-year window remains open, the planet will be engulfed by extreme heat, drought, floods and poverty by 2050, the nonpartisan report predicted.

Whether to have children was on Sheehan’s mind when he and other employees at a previous writing job attended a work-sponsored meeting about opening a 401(k) two years ago. Sheehan and many of his colleagues left the meeting without starting accounts. He still has no money saved for retirement and has only grown more resolute in this decision since then.

“When I was young, watching the first calls to arms against climate change, it felt like this thing we were all going to have to band together to get rid of,” Sheehan says. “Instead the next 10 years were spent staring into the storm and doing nothing.”

Many millennials can’t save anyway

Sheehan admits that climate change was not the only factor in his decision to opt out of a 401(k); he also found that a voluntary paycheck deduction would make it hard for him to pay rent and afford the cost of living in Los Angeles.

Most nonsaving millennials say financial constraints are the top reason. The average student-loan debt is $37,172, according to The Wall Street Journal. And, while the cost of living has gone up, wages have remained stagnant over the past 30 years.

“When I looked at how much I was going to have to cut back my lifestyle to afford to be able to save, I felt very defeated,” Sheehan says. “In order to have a chance at retirement in the future, we have to live vastly differently now, in a way I don’t think prior generations were ever forced to do.”

Similarly, Rodriguez said that, even without the threat of climate change, she likely couldn’t afford to save for retirement — and might not need to. Because she comes from a Latina family, she says culturally it is expected she would move in with family in old age and not have to pay as much in retirement costs.

“Both of my parents are immigrants. I did not grow up in a culture of professionalism. I graduated with thousands in student loans — I have never made enough money to save for the future,” she says.

Although she does not save money for retirement, Rodriguez does take action for the future: she’s taught herself to garden (“in case of a total collapse of the food system,” she says) and invests in learning hands-on skills like mechanics and bike repair.

“It’s kind of my own version of retirement,” she says.

Erin Lowry, author of “Broke Millennial Takes On Investing,” recommends preparing for retirement no matter what you believe will happen, referencing the Y2K phenomenon, when some people sold their belongings and made other rash choices in the belief that the world would end with the dawn of the year 2000.

“Even if you have a defeatist mind-set about the future of the planet, it’s better to prepare as though you, and the planet, will survive into your retirement years because the alternative is also bleak,” she said. “Failing to properly plan for a future means guaranteeing yourself a more difficult life.”

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gatsby1219
gatsby1219

Selling fear has always been profitable.

MrLiberty
MrLiberty

It is the basis of nearly all religious and ABSOLUTELY ALL GOVERNMENTS.

Ivan
Ivan

“the weather is off”

What does this mean?

The delicate flowers believe in nothing and will therefore fall for anything. It makes them easier to herd, like goats. Sad lot of people.

Jeds And Growlers
Jeds And Growlers

It means:

“I am a smarmy little millennial-bitch that wants to spend every dime I have and make excuses for doing it, so when I turn out to be wrong, I can blame it on someone else pumping me with fraudulent B.S. instead of looking at myself for being gullible and materialistic, while taking savings from the ants”.

The guy at the end literally said so and doesn’t think anyone that came before ever had to “sacrifice” as much as him and his millennial bros:

“When I looked at how much I was going to have to cut back my lifestyle to afford to be able to save, I felt very defeated,” Sheehan says. “In order to have a chance at retirement in the future, we have to live vastly differently now, in a way I don’t think prior generations were ever forced to do.”

So, no more 8$ lattes, living right downtown in the high-rent area, no vacations to Jamaica or Breckenride annually, etc…..What a little twat. I his inexperienced, jealous little mind, prior generations were never “forced” to live “vastly differently”….

Yeah, because Starbucks and Amazon couldn’t be taken away from you 50 years back.

I just want to find him and smack the shit out of him. Gen-Dumbass is what it should be called.

turlock
turlock

My grandfather was born in 1899. The first 50 years of his life included WW1, financial collapse in 1929, and WW2 for the trifecta. I am nearly 70 and really tired of the whining horseshit from the younger set. I have 2 sons in their 40’s, The work hard, are doing well, have families. Losers always project their failure on other people and events.

Iska Waran
Iska Waran

They’re going mental – because of the weather!

Quick – sell me your beachfront property before it’s underwater! I’ll give you 50 cents on the dollar – or pay you in weed.

Jackdaws And Gars
Jackdaws And Gars

They’ll take .25 on the dollar if you pay in Vape cartridges and accessories.

Anonymous
Anonymous

Major issue w this.
People who fail to plan and save make poor excuses. Then when things get desperate, the sympathy card is played, and those who did sacrifice and save are called greedy, and are expected to fork over excess reserves to those without.
Double barrel middle fingers to that notion.
If I spend 40-50 years scrimping, saving, sacrificing, to stretch a dollar to retire comfortably, I earned it.
If Lucy lives outside of her means, paycheck to paycheck, pissing away any or all savings over 40 years, she enjoyed all the luxuries, discipline free, with no concern for affording anything in her sunset years…that was her idiotic choice. No shits or handouts will be given, when it becomes dog eat dog.

Young adults with no retirement plans or goals are doomed to a difficult life in their golden years.
Those who fail to plan are planning to fail. Whining about the future.
It’s too frightening. Too difficult.
Horseshit.
Each payroll, earners should immediately take 10% and sock it away somewhere safe, as theirs to keep. Keep accumulating that.
Never spend it.
Then, you simply live off the rest.
If something is unaffordable, then you do without.
Get out of debt and stay out.
This is the simplest method.
There are other ways, but their reward is in direct proportion to their difficulty + effort expended.
Don’t have work? Find some. Create some. Think.
What talents do you have?
What do you know how to do that will serve people, who’ll pay you for it? Earn accordingly.

It’s too bad the non savers couldn’t get a 1-year or 5 year taste of the Depression year’s desperation, and see how people in much worse shape, with far fewer opportunities had to struggle and suffer.
Maybe then they would see how important savings goals are.
And make up for lost time.

They are doomed, for not even trying at this.

mygirl...maybe

the world as we knew it no longer exists. save? to earn a pittance and be in a situation where the gov can either steal savings or declare your money null and void?i don’t really fault millennials too much, they’ve been left with a shit sandwich. go read the news, look at the morons in dc, the corruption at epic levels and anyone who tries to help shine a light in the darkness is excoriated, marginalized, brutalized and ultimately destroyed.

Gryffyn
Gryffyn

You have said it all in a few words. Even in a dire straits scenario not everyone will be extinguished and there will be a few outlying survivors. I have a wet weather pond and every year some little frogs sing, mate and then tadpoles swim around. Usually the pond dries before the pollywogs turn to frogs and they die. Sometimes I rescue a bucket full and move them to another location. This year the frogs mated early and most eggs survived a late frost. Now the little swimmers are developing legs, the pond is full, rain is in the forecast and some will surely survive. Life goes on.

mygirl...maybe

i have 2 stock tanks, one is small but holds some decent sized bass and a few turtles. we had an extended spell of dry weather and i toyed with the idea of slogging out there to see what i could rescue…fortunately it rained, getting stuck in sludge isn’t really my idea of fun. good on you for rescuing the frogs, i have a great fondness for the wee critters…

Jaz
Jaz

America has been subsidizing these people for a long time; most recently when we bailed out people who could not pay their mortgage.
It will go on because it happens so incrementally most don’t see it or are too ‘occupied’ to care.

yahsure
yahsure

My advice is to start investing when you are very young. If you invest early and leave it alone until retirement. I get tired of all the pessimism.

Walter Johnson
Walter Johnson

I’ve always thought a dose of no BS poverty, the kind where you’re really careful how you treat your one pair of pants, where you turn your socks over so the holes are on top, where you make new holes in your belt… or pull the rope tighter to keep that pair of pants up… grease your boots with that little square of pork fat from your day’s can of pork and beans… you treat your boots like they’re gold because they’re all that’s between your feet and the rocks and heaven knows where you’ll get the money for another pair… even at the Good Will… really stinks and teaches indelible life lessons about money, spending and saving.

When you’ve always got someone to cry to, you learn how to cry really convincingly, when you don’t have a handout waiting you learn how to survive. Once you know how to survive on your own, with a little effort you can learn how to prosper.

Steve
Steve

Invest in gold. It has been and will be a good investment. It’s also out of reach of the govt. Nobody needs to know you’ve got it. BELANGP on YT makes a very strong case for this investment type. His videos are excellent

wxtwxtr
wxtwxtr

We were flagellated into hiding under our desks for the imminent atom bomb blast for a couple decades, living in fear of total annihilation of all life on earth. And these p*ssies are afraid of the fookin weather??? WTF?

Trump is right. Yesterdays media is Public Enemy Number One. Wonder if they fit into the USC 18-2331 definition of terrorists?

MrLiberty
MrLiberty

If only they would off themselves before the next election cycle.

Guy White
Guy White

In re extinction; how come pests never go extinct? Flies, mosquitoes, Alexa Occasional-Cortex all seem to be thriving while bats and honeybees and sharks are reported to be dwindling.

gilberts
gilberts

First off- who cares? It’s THEIR problem, not ours. My first impulse is to assume the financial industry is the only entity concerned about the Millennials, because it’s a largely untapped source of wealth to steal. I strongly doubt the banksters care about Millennials’ future comfort.

The problem is, they might be right. Not about climate change; that’s for idiots. They might be right that the entire system everyone else has accepted and relies upon may no longer exist by the time they can consider retirement. So what’s the point of saving anything if you know it will be like that really cool sandcastle you built at low tide?
I feel the same way about my retirement and I allegedly only have about 20 years left. I don’t actually believe I’ll ever be able to retire and I don’t believe there will be any support net waiting for me, thanks to the boomers. I fully expect total Yugo-style post-USSR Rwanda, Haiti, Somalia, and 2004 Iraq-style chaos long before my estimated retirement age.

But I still put $ in my retirement account, because I would not be the first guy who ever out-lived his expectations and whose doom saying failed to happen on schedule. It probably is a fool’s game, but I would rather be prepared, just in case I and my retirement account both survive long enough to be reunited. It’s literally just another aspect of being a prepper. You can still prepare for the end of the world and the end of your working life, too.

Also, if these foolish bastards really do see themselves as preparing for The Apocalypse, or something, then it should seem reasonable to prepare for NOT The Apocalypse. There is a very real danger your TEOTWAWKI will not happen on time in your expected manner.

So I still contribute. It’s a no-brainer when you look at the matching funds your employer likely contributes. Mine is more generous than anything I have ever seen or heard of, so I max it out. I don’t put all my eggs in one basket, though. I also stack My Precious and I stock trade goods. I even have a couple shelves full of booze. Scotch, bourbon, vodka, wine, etc. Just in case they come in handy some day. It stores well and rarely loses value. I got a mix of the full-size bottles and the little 1/3 size bottles. I’ve been buying up tons of seeds, too. Not all of them are for saving; I’m putting in a big garden this year, rain permitting, and I’m trying to establish a permaculture-type food forest in my yard. I planted apples, cherries, plums, and crabapple this year. I just installed the first bed around one of the cherries and in it I planted honeyberry, onions, garlic, marigolds, chrysanthemum, mint, sage, lavender, burdock, daisies, etc. I’ll be putting in a whole lot more as time and weather permits. Last night, I got a couple sumacs and gooseberries delivered. Sassafrass and figs and others are on the way. All things being equal, THAT’S going to be a heck of a retirement plan once it’s mature and productive.

Millennials aren’t the brightest people. It’s kind of sad to see them go through life and just fuck up every stage of it. It’s almost as if their boomer parents switched their roadmap for a successful life with an instruction manual for a Maytag washing machine. I hope they figure it out for themselves, but I assume they’ll just embrace socialism so they can loot my retirement, Dr. Zhivago my land away, and make us all equally miserable.

Anonymous
Anonymous

And now you understand two things:
1. the power of propaganda – global warming/cooling, err, better rename it to climate change….
2. the lack of the ability to logically think – due entirely to .gov education/indoctrination

put the two together and you have a nation of sheep, who spend their entire paychecks on grub hub and wind up working for uber with a 4 year degree, cause work is hard, but with uber I get to play with my phone all day, and get paid, yea for me, it’s all about me anyways.

Llpoh
Llpoh

I keep saying it – this presents enormous opportunity for young who swim against the tide. Teach your children the was of thrift, education, hard-work, family and they will thrive.

Dutchman
Dutchman

It’s fine with me, they keep paying my SS.

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