For someone in their 20s, retirement is something their parents are talking about.
It is almost impossible for them to imagine their own lives 50 years out. Telling kids to save for that day — when student loans and car payments and fixed expenses are eating up their paychecks — does seem laughable.
When she talks to young people about planning for retirement, Gail MarksJarvis, who writes about personal finance for the Chicago Tribune, likes to use the $20 lesson.
"If you ask them if they can save $20 a week, they say, sure. That's a couple of lattes and a drink with a friend," said the author of "Saving For Retirement (Without Living Like A Pauper Or Winning The Lottery)."
"But if you ask them if they are, they will tell you no. They haven't gotten around to it, they don't know what to do with it, they are busy."
The problem isn't the $20, it is the procrastination, she said. That's when she does the math for them: $20 a week, 52 weeks a year, 40 years of working — with the market averaging 9.8 percent return over those 40 years — is about $480,000.
Wait until you are 35 to start saving that $20, and you will have a little more than $180,000 at retirement. To catch up to where you might have been if you'd started at 25, you'd have to save $50 a week.
The other thing young people fail to do is to contribute enough to their employer's 401(k) plan to earn the maximum in matching funds, said Ms. MarksJarvis. That is, if they are lucky enough to have such a plan at work.
"Over half of 20-somethings don't put in enough to get the match. Over a lifetime of work, that's like throwing away about $200,000.
"I tell them, 'If your boss walked up to you with an armload of hundred dollar bills, $200,000 worth, and offered to give it to you, would you tell him, "No thanks. I'd rather go out with my friends this weekend?"' No one in their right mind would do that."
The benefit of saving right away for retirement, she said, is that later in life you can feel more confident making other important financial decisions because you know your retirement savings plan is in place.
She uses the example of her own daughter, who left the work force in her 30s to earn an advanced degree and could take comfort in the fact that her retirement was on solid footing.
Ideally, she said, young people should save 10 percent to 15 percent out of every paycheck, dividing it between retirement funds and a rainy day fund.
"Then, when you get a raise, add half or even a quarter of the raise to your savings."
It isn't just procrastination that keeps workers from saving. It is intimidation. Most of us don't think we know enough to invest our savings. "If we think we are going to fail at something, we tend to run away from it," said Ms. MarksJarvis.
We are afraid of looking stupid, or making a mistake or taking a risk with our money, so we do nothing at all. That can be particularly true of 20-somethings who are focused on getting started in the workplace, not retiring from it.
"There is a really easy way to do this," Ms. MarksJarvis said. "Target date funds. Just about everybody has them."
Choose the year in the future when you think you might be retiring and put your money in a fund with that target date. Adjustments and redistributions are made automatically through the years.
Young people aren't going to work for one company for 40 years and retire with a nice pension. They are going to have several jobs — maybe even several careers — and they are going to have to build their own retirement fund.
But the mistake they often make when changing jobs? They don't roll over the money in their company 401(k). Somebody hands them a nice big check and they spend it, losing the savings and incurring tax penalties at once.
You might not be able to stop your adult children from making these financial mistakes, but you can warn them.
"After everything I have said to you, what I finally did with my own children was nag," said Ms. MarksJarvis.
"Nagging is good!" she said. "But nag with the facts. Show them how the money can add up, and make believers out of them."
Susan Reimer's column appears Mondays and Thursdays. She can be reached at email@example.com and @SusanReimer on Twitter.com. Text NEWS to 70701 to get Baltimore Sun local news text alerts Text NEWS to 70701 to get Baltimore Sun local news text alerts