Short-term: caterpillar. Long-term: butterfly.
According to a report from T. Rowe Price, both adults and children understand the importance of saving, but there is a tendency to focus on short-term goals, often at the expense of long-term needs. Among the highlights and concerns of The 5th Annual Parents, Kids & Money Survey:
Interestingly, gaining financial security by becoming famous may in some ways be closer to reality for the overwhelming majority of survey respondents. According to data from the Investment Company Institute (ICI) and the Employee Benefit Research Institute (EBRI), the average account balance is in the vicinity of $60,000. Only 7.5% have balances above $200,000, let alone $1,000,000. Even for those employees in their 50's and 60's who have been with their employer for 30+ years, the average balance is only around $200,000, not particularly close to the million dollar threshold.
As suggested in earlier posts, the remedy would appear to lie in recognizing that neither short-term nor long-term savings occur in a vacuum. A good solution will recognize that finding the sweet spot for savings requires factoring in both goals. One without the other would appear to be unrealistic for most individuals and families.
- 50% of parents do not save regularly for retirement, 42% lack an emergency fund, 54% are without life insurance, and 74% do not have a current will.
- Although 73% of parents regularly talk to their kids about money, most of the time it is with a short-term focus, such as back-to-school spending (62%), rather than long-term needs (39%). Some parents (14%) discourage their kids from having money conversations at all.
- 70% of children and 66% of parents believe that a good education is important for a better financial future, but only 41% are regularly saving for retirement. By contrast, 46% regularly save for vacation.
- While 84% of kids think they will be financially independent of their parents by age 18-25, 18% of parents believe that their children will need to support them in retirement.
- 24% of kids believe that to reach the million dollar threshold that the survey suggests is needed for a secure retirement, they will need to become famous, versus 21% who believe they should invest in stocks and bonds.
Interestingly, gaining financial security by becoming famous may in some ways be closer to reality for the overwhelming majority of survey respondents. According to data from the Investment Company Institute (ICI) and the Employee Benefit Research Institute (EBRI), the average account balance is in the vicinity of $60,000. Only 7.5% have balances above $200,000, let alone $1,000,000. Even for those employees in their 50's and 60's who have been with their employer for 30+ years, the average balance is only around $200,000, not particularly close to the million dollar threshold.
As suggested in earlier posts, the remedy would appear to lie in recognizing that neither short-term nor long-term savings occur in a vacuum. A good solution will recognize that finding the sweet spot for savings requires factoring in both goals. One without the other would appear to be unrealistic for most individuals and families.
