Is Retirement Saving ‘Wasted’ on the Young?
The academics are at it again. In a paper provocatively titled “The Life-Cycle Model Implies that Most Young People Should Not Save for Retirement” no fewer than four of them take 48 pages to make that case. The “trade press” breathlessly intoned “ Most Young People Should Not Save For Retirement in Their 401k ,” “ Many young people shouldn’t save for retirement, says research based on a Nobel Prize–winning theory ,” “ Under 35? Don’t Save For Retirement Yet, These Experts Say ,” “ Economists Say Enjoy Your Youth and Save Later .” At least one had the temerity to offer a contrasting viewpoint (see “ A New Paper Says Young People Shouldn't Save for Retirement. Advisors Disagree ”), while The Street at least called it out as “ This May Be the Worst Financial Advice Ever Shared .” Like most research, the conclusion is a premise based on assumptions. Here the most basic is that this thing called a “life-cycle model” is worth considering in the first place. Now, granted, it’s t...