To The Graduates-to-Be

Spring is in the air and college graduation season is set to kick off in May. I know that not many of you getting this are in this age band, but this is a good one to send to a family member or friend who is. First off, Congratulations! Your hard work has paid off and you’ve achieved higher education, but life may follow an unfamiliar path from this point on.

According to USNews, 69% of you have $30,000 dollars of debt on average and are looking to enter a U.S. labor force that has nearly the same median income as in 1996 when adjusted for inflation†. Jobs are there, but you will soon find that affording your own vehicle and rent may prove a formidable obstacle depending on where you want to live. Rent prices went up 4.4% in Pittsburgh last year and seemingly normal place like Denver saw an 11.6% increase††. Those are historic highs.

I’m not trying to be cynical or talk you into flunking a few finals this week to stay in the bubble, but the big three of school loans, higher rents, and stagnant paychecks can really put the squeeze on. You may feel like you don’t have much money for yourself and like there’s nothing left over. This is where you’re going to hate me because I am going to lay yet another financial burden on you. Despite all of this you really, really, really need to start saving for retirement a.s.a.p.

The chart I am about to show you is so powerful it’s actually hard to believe.

The Benefits of Saving and Investing Early

Original source page:

This is a hypothetical example and is for illustrative purposes only. No specific investments were used in this example. Actual Results will vary. Past performance does not guarantee future results. Does not take into account taxes or fees. All investments are subject to risk including the risk of loss.

What you’ve seen above is that investing for the first 10 years of this scenario alone leaves you with more money at retirement than investing that same amount each year for the remaining 57. How can this be? It’s called compounding interest; Google it.  Now, a return of 10% a year these days is a tall order so don’t focus on the ending value; the comparison is what’s important. Moral of the story: don’t wait to start saving!

You can come up with a million reasons why you can’t afford to save for retirement: I want to travel, I need new adult clothes, I have a girlfriend/boyfriend with expensive taste. The truth is though, as the cliché goes, you really can’t afford not to. Almost no employer offers a pension anymore and, if you’re an infamous millennial like me you have no clue if Social Security will be there for you when you retire. So while the rest of the real world gets dumped on you over the next 4 years, make sure your plans for retirement are front and center, and maybe consider contributing a little more to your 401(k) in the early years instead of upgrading from that futon.

This article is directed at graduates, but really applies to anyone entering the workforce. I hope you’ve heard all this before and already been shown that chart, but if not, here you go and happy saving.

† Source
††Source CNN Money

All the best,

Wesley R. Nicholson, Mike Allen and Aaron Everdyke

Securities Offered Through Commonwealth Financial Network, Member, FINRA, SIPC, a Registered Investment Advisor. Advisory Services offered through Laurel Financial Group are separate and unrelated to Commonwealth. Laurel Financial Group is a Registered Investment Advisor
Disclaimers: Please place all orders for purchase and or sale of any securities by personal phone call. We cannot accept securities orders by voicemail or by email. If you cannot reach the office, please call Commonwealth Financial Networks Trade Desk directly at 1-800-251-0080, option 1. This email, including attachments, is intended for the exclusive use of the addressee and may contain proprietary, confidential, or privileged information. If you are not the intended recipient, any dissemination, use, distribution, or copying is strictly prohibited. If you have received this email in error, please notify me via return email, permanently delete the original message, and destroy all copies.  All indices are unmanaged and investors cannot actually invest directly into an index. Unlike investments, indices do not incur management fees, charges, or expenses. Past performance does not guarantee future results