Time and money: Experts say young adults need to save more

CHICAGO -- At 24, Jeffrey Berman is in better financial shape than many of his peers.

He has no student loans, thanks to his parents, and about $1,200 in credit card debt, which he plans to pay off with his income tax return. He also just started contributing $85 a month to his 401(k) -- an amount he considers paltry, but better than nothing.

Still, Berman knows he should be saving more money. And in a time when more companies are cutting pensions and Social Security remains a question mark, financial experts would agree -- especially as young people's debt from student loans and credit cards continues to skyrocket.

"The twentysomething generation, more than any other generation, is going to be left to fend for itself," said Bill Slater, the St. Louis-based vice president of retirement and savings plans for the MetLife insurance company.

A recent survey of MetLife clients and employers found that 40 percent of workers ages 21 to 30 had not begun to save for retirement -- and many young adults have little clue how to even begin doing so.

"It's impossible. No one teaches you what you're supposed to do," said Berman, who graduated from Syracuse University two years ago and now lives in Los Angeles, where he works as an assistant to an entertainment studio executive. "It's a real shock getting out into the real world."

Growing up in the comfort of more prosperous times has made the adjustment that much more difficult for this generation of twentysomethings, one expert said.

Reality hits

"Through high school, the stock market was doing great; unemployment was low," said Catherine Williams, the Chicago-based vice president of financial literacy for Money Management International, a consumer credit counseling service. That caused many young people to have high expectations about their own financial futures -- until reality hit.

One example of the financial pinch: Student loan balances for the average college graduate were $18,900 in 2002, more than double the amount a decade earlier, even when adjusted for inflation, according to researchers at Demos, a nonpartisan public policy group. Their analysis of the most recent Federal Reserve data available also found that average credit card debt for adults age 24 to 34 was $4,088 in 2001, an increase of 55 percent since 1992.

While some data indicates the current generation is saving more than previous groups of twentysomethings, those earlier generations also started in better financial shape.

For Lia Dowd, a 24-year-old paralegal in St. Louis who plans to go to law school, it's hard to envision life beyond her immediate goals: "I don't sit around and think about when I'm 60."

She said it's been more helpful to receive tangible, practical advice -- namely from financial experts who've suggested placing a set amount of money into an interest-bearing account each week, even if that amount is small right now.

For Berman, the 24-year-old in Los Angeles, it took an honest review of his finances, which revealed that he was spending too much money eating out at restaurants.

To remedy that, he's recently started buying more groceries so he can cook for himself -- not always an easy thing to make himself do.

"But if I don't start trying to save more now," he said, "when am I going to start?"

On the Net

American Savings Education Council: www.asec.org