We Might Be Wrong About Saving for Retirement

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You've probably been hearing this since you entered the workforce: Start saving for retirement now. The magic of compound interest will make your golden years far better the earlier you start. That advice hasn't changed in decades, but it may be due for an overhaul now.

That's what researchers at the National Bureau of Economic Research are proposing in a new paper, which is still in its early stages but is naturally attracting attention. You probably know better than anyone that financial expectations for millennials haven't matched up with the rosy picture our elders painted. Between a student debt crisis, two major economic downturns, political upheaval, and of course, a global pandemic, our early and prime earning years have been historically rocky. When and how, you might ask, are we supposed to start saving for retirement?

The NBER paper suggests it may be all right to wait until your early 40s. Thanks to the different ways different demographics come into their earning power, as well as different expected life trajectories, it may make more sense for some groups to focus on the here and now, whether that's paying down debt or spending that money on kids and health care.

One note of caution: This paper hasn't yet been peer-reviewed; it's essentially a first draft, albeit one with a lot of research and expertise behind it. It's not necessarily a green light to ditch the entire idea of retirement planning — more of an acknowledgement that there's no one-size-fits-all solution for the future. Talk to a financial planner about your own circumstances to better plot what you should do.