Can You Afford to Retire?

generation y -- a short survey

FRONTLINE asked several young adults how they think about retirement and saving, and what they're doing about it.

How Much Have You Saved Toward Retirement?

College admissions officer, 23
Plans to retire: Mid- to late-50s

"… I've fully-funded my Roth IRA for the 2005 and 2006 tax years. I have about $9,300 in a Roth IRA and an additional $6,000 in mutual funds in taxable accounts. Since I'm young and have a high tolerance for risk, I've funded 100 percent of my Roth IRA with stock mutual funds, most of which are index funds. I intend to add bond funds in a few years. …"

"I'm downright pathological about saving. … Sometimes I wonder whether I'm saving too much for retirement, considering that I feel pressure to save for graduate school and pay off student loans. The reason I'm able to save so much is that I live well below my means and don't own a car, which is no small feat in Southern California. But if it's the choice between a comfortable retirement and conspicuous consumption in my twenties, I'll choose the comfortable retirement."

Medical student, 27
Plans to retire: 65

"I can't save; I am living on loans. … I worked for four years before medical school, and I am using that money to offset the cost of living. I plan to begin saving once I get an income, [when I start my] residency. At that point, I will still be paying off loans, but I hope to save a little.

"I plan to save mostly for my children's future education, not for my retirement. In truth, I am not worried about saving for retirement. I see my parents worrying, but for me it is far away. …"

Public secondary teacher, 28
Plans to retire: Mid- to late-60s

"I contribute to the [State] Teacher Retirement System, but I will need Social Security, too. I can't retire without it. … I am frugal. I save as much as I can, but I anticipate working for a very long time and relying on my children as well. …

"I think I will be working until my mid- to late-60s because I will need to keep my health insurance; it is too expensive to afford with just retirement savings. We have teachers at our school who are pushing 70 and are still teaching because they have to keep the health insurance."

Mechanical engineer, 28
Plans to retire: Phased retirement beginning around 50

"Altogether my retirement accounts total somewhere in the neighborhood of $40,000. … Nearly 80 percent of my 401(k) portfolio is stocks. … I am particularly lucky to be involved in a company of which I own a small stake. I expect the proceeds of this deal to potentially double the available retirement funds if things go as planned. If not, I have been contributing as much as I can afford to a 401(k), IRA, dividend bearing life insurance policies that are building cash value, and some stocks.

"By my mid- to late-40s, or early-50s I plan to change professions to a less time consuming occupation, allowing me more freedom to travel and donate my time to charities. Then by the time I am of official retirement age (whatever that age will be in the future), I plan to have enough in my retirement savings accounts to live in the same manner I have grown accustomed to in my 40s and 50s. "

Graduate student, 27
Plans to retire: 55 - 60

"I have a 401(k), and a couple other things my parents set up for me. … I also have stocks that give me, around $2,000 - $3,000 a year. I had savings, but I saved to go to [graduate] school, so I'm basically back to zero again."



Which type of retirement plan would you rather have: a lifetime pension or a 401(k)?

Mechanical engineer, 28

"Given the problem with pension funds going under and irresponsible pension fund managers investing in hedge funds and other extremely volatile options, I would prefer to have control over my own money."

Federal employee, 29

"I like the 401(k) accounts … just because I don't know if my current job will be my career. … I am 29 years old, and I am still not 100 percent certain that my job is one I want to do for 36 years. I think generations before us were better able to pick one career and go for it."

Human resources assistant, 33

"A lifetime pension. Why? … Because we are imperfect savers. How many of us know how much money we should have in a 401(k) in order to retire comfortably? … Personally, I don't want to know, and I don't want to worry about the stock market crashing and me losing my 401(k) balance. … Why can't we have a Social Security system that takes care of this? It's ridiculous that we don't."

Administrative assistant, 26

"I haven't worked at a company long enough to even start earning years toward a pension and I don't think I will plan to work at a company long enough to receive a pension, so a 401(k) is a much better option."

Lawyer, 28

"I would much prefer not having a defined benefit because of where my age is. A defined-benefit plan will give you maybe $2,000 a month for the rest of your life. Two thousand dollars today may be fine, but by the time I am 65 … it's like somebody having a $200 a month pension today. I need something that harnesses the power of appreciation over the next 30 years."



What portion of your retirement do you think will come from Social Security?

College admissions officer, 23

"Frankly, I don't see a future for Social Security. If it still exists when I retire, I assume its contributions to my retirement will be meager. By comparison, both my parents, who are in blue-collar positions, will have little else but Social Security in retirement."

Public elementary school teacher, 25

"None. It'll be a nice surprise if it's still there."

Human resources assistant, 33

"I just read … that there's enough in Social Security to pay everyone $12,000 a year. So, that's $1,000 a month. That's more than my $650 from my imaginary 401(k)."

Public secondary teacher, 28

"I can't retire without it."

Federal employee, 29

"I wish I could say I could count on Social Security. … As I understand it, the money I am actually paying into Social Security will only fund people of the generations ahead of me, not my generation. … I think an apt analogy is the game "musical chairs." If what I've heard is true, the music will have stopped when I am 65, and there won't be a free chair for me, … which is a shame when I am paying nearly $5,000 a year into Social Security and Medicare."

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posted may 16, 2006

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