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SALT LAKE CITY -- How young is too young to start saving for retirement? Should a teenager start putting a few extra dollars away from his first paycheck?
"Well, it's probably a little early for people to be thinking about retirement," said Stephen Johnson, a branch manager at Raymond James Financial. "It's hard for me to make an 18-year-old consider retirement."
Johnson cautions young Americans not to rely on adding Social Security benefits to retirement funds; rather, they should save money as if the funds are not part of the equation.
Johnson recommends young working adults in their mid-20s begin to put away the recommended 10 percent to 15 percent of their income.
"That would probably meet your needs in retirement, but I think the average is only about 5 percent nationwide right now," said Johnson. "So we're not putting enough money away as employees for that retirement we plan on having."
Johnson says Social Security benefits were never meant to completely cover Americans once they stopped working. The fund is only meant to support roughly 20 percent to 50 percent of your wages upon retirement, depending on your income level.
"Generations ago, it was about 100 percent of their income," said Johnson. "Lower income folks, it's probably on average 50 percent. For two-wage earner families, it might be 20 percent to 25 percent."
Johnson cautions young Americans not to rely on adding Social Security benefits to their future retirement funds; rather, they should save money as if the funds are not part of the equation.
Johnson suggests young people aggressively save and invest their own money during their lifetime and to "count on it being maybe 20 percent to 25 percent."
Younger Americans, mainly between the ages of 25 and 35, should not to worry that their Social Security benefits will disappear in the near future, Johnson says.
"If you look at the statistics of the Social Security program, it's completely covered if they make no changes at all, probably for another 15 to 20 years," he said.
Johnson says politicians will likely work on restructuring the program to either stretch the age requirement or eventually revamp the system.
E-mail: niyamba@ksl.com
