2008 Woodie Awards
College students learn to be money-savvy
Kim Beson, Collegian Correspondent
Issue date: 5/8/08 Section: News
Hashemi acknowledges that retirement is not a part of the typical college student's vocabulary. But when it comes to saving, young people have time on their side. This rings true when it comes to Roth IRAs. If an 18-year-old opens a Roth account and puts 10 dollars in it each month at a nine percent rate, then by age 65, that money will have accumulated to $148,878.
Devlin Man, a Mass Bankers intern and UMass junior, started his IRA when he was 18. He has also invested in stocks. He confesses to being the person who picks pennies off the ground.
"I have this weird obsession with money," Man said.
Not all college students do. According to a Perspective survey from the Investment Company Institute, a national association of U.S. investment companies, in 2004 only 19 percent of people younger than the age of 35 have an IRA. This low percentage is unlikely to have changed over the course of the last four years, added Hashemi.
The average college student does not invest in an individual retirement account because of such common costs as books, tuition, loans and weekend spending.
"That's 40 years away. 40 years to a 23-year-old is never-never land and it is hard to grasp," said Floreen.
"They want their money now," Man added.
Social Security played a factor in Hashemi and Man starting IRAs. They believe the program is becoming "obsolete." However, both UMass Amherst finance professor Ben Branch and Floreen have a more optimistic outlook, believing it will withstand any troubles.
"Social Security is running out of money in a sense, but the government is not simply going to let that system fail," Branch said. "They will come up with the money because it is too popular a program."
However, Social Security is not enough to live on, and most people have to supplement, said Branch. Most financial advisors say it can take 75 to 85 percent of your pre-tax annual income to maintain a comfortable lifestyle. Companies who have pension plans are cutting them back, and rising inflation and rising healthcare are reasons to save for retirement, he cautioned.
Devlin Man, a Mass Bankers intern and UMass junior, started his IRA when he was 18. He has also invested in stocks. He confesses to being the person who picks pennies off the ground.
"I have this weird obsession with money," Man said.
Not all college students do. According to a Perspective survey from the Investment Company Institute, a national association of U.S. investment companies, in 2004 only 19 percent of people younger than the age of 35 have an IRA. This low percentage is unlikely to have changed over the course of the last four years, added Hashemi.
The average college student does not invest in an individual retirement account because of such common costs as books, tuition, loans and weekend spending.
"That's 40 years away. 40 years to a 23-year-old is never-never land and it is hard to grasp," said Floreen.
"They want their money now," Man added.
Social Security played a factor in Hashemi and Man starting IRAs. They believe the program is becoming "obsolete." However, both UMass Amherst finance professor Ben Branch and Floreen have a more optimistic outlook, believing it will withstand any troubles.
"Social Security is running out of money in a sense, but the government is not simply going to let that system fail," Branch said. "They will come up with the money because it is too popular a program."
However, Social Security is not enough to live on, and most people have to supplement, said Branch. Most financial advisors say it can take 75 to 85 percent of your pre-tax annual income to maintain a comfortable lifestyle. Companies who have pension plans are cutting them back, and rising inflation and rising healthcare are reasons to save for retirement, he cautioned.
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