Millennial fans who read through all 3,407 pages of the Harry Potter series know that Albus Dumbledore is among the greatest wizards ever. But they don’t, apparently, know how to save for retirement.
According to a Pew Charitable Trust analysis of 2012 Census Bureau data, more than two-thirds of millennials (ages 22 to 34) have failed to open a retirement savings account. If evil forces such as low salaries, high student loans and a lack of access to 401(k) plans are conspiring against your financial future, why not look to Dumbledore for some good advice?
“Happiness can be found even in the darkest of times, if one only remembers to turn on the light,” says Dumbledore in “The Prisoner of Azkaban.” As this June marks the 20-year anniversary of the series’ release, what better time to faithfully reference Dumbledore ― in the form of eight of his classic quotes ― and start saving?
#1 “It matters not what someone is born, but what they grow to be.” Time is the one thing that millennials have on their side that no other working generation has. Life expectancies are only rising, and the impact this has on the exponential growth of your money due to compound interest can be quite magical. For example, if at the age of 22 you put $10,000 in an account earning 8-percent interest and never add to it again, you’ll still have over $1 million by the time you turn 82.
#2: “It is our choices that show what we truly are, far more than our abilities.” Even if you don’t have the ability to save high dollar amounts now, you can still chose to save something. Even a “riddikulus” $25 a week earning 8-percent interest will grow to give you $466,998.79 in 45 years’ time.
#3 “Numbing the pain for a while will make it worse when you finally feel it.” Millennials are facing a nearly pension-less future combined with uncertain government programs and benefits. There’s nothing to gain by putting this off. If your employer offers a matching 401(k) plan, then by all means take advantage of the free money. If you’re self-employed or one of the 35 percent who work for employers not offering 401(k)s, opt for an IRA or a SEP IRA. Yes, they offer the same tax advantages as a 401(k), you can still invest in stocks, and setting them up is simple.
#4 “Where your treasure is, there your heart will be also.” Remember why you are saving in the first place. Think about how good it will feel to spend time with your friends or kids or grandkids without rushing off to work. Think about how good it will feel not to be a burden to your family.
#5 “We must all face the choice between what is right and what is easy.” Yes, there will be hard days. You will be tempted to take that extra $25 and give in, go out and throw caution to the wind. Next time you’re faced with that decision, remember what you are choosing and why.
#6 “It does not do to dwell on dreams and forget to live, remember that.” On the other hand, don’t make yourself crazy. Figure out how to do both ― save for retirement and live your life.
#7 “Age is foolish and forgetful when it underestimates youth.” As millennials, you have officially become the nation’s largest demographic at 83.1 million, according to the latest U.S. Census Bureau report. The financial industry is desperate to serve you. The data-heavy white paper Millennials + Money generated by Facebook found that even though millennials are underinvested, 86 percent say they value saving. If lack of knowledge is stopping you, ask for help.
#8 “People find it far easier to forgive others for being wrong than being right.” While it might be hard to stomach the advice of all the well-meaning people imploring you to save, saving is still the right thing to do. Whether you get with a good advisor or take a more do-it-yourself approach, what matters is that you do what you can, or as Dumbledore says, “fight and fight again, and keep fighting.”