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Originally Posted by disneysteve
This is a tough question. As Jim mentioned, they have the tremendous luxury of time as far as retirement savings is concerned. $1,000 invested at age 18 and earning 8%/year will grow to over $42,000 at age 65. In contrast, if I put away that same $1,000 today at age 42, I'll only have $6,000 at age 65. For the same $1,000, the 18 year old ends up with 7 times more than me. That's a pretty powerful argument in favor of starting early for retirement.
On the other hand, buying a house is important too, though I honestly had no thoughts along those lines when I was 18 or 20. I was nearly 30 and married for almost 2 years when we bought our home. Until I knew where I was going to end up job-wise, I saw no point in buying a home. I was quite content to rent based on where I needed to be at the time. Since renting was much cheaper than owning, that also gave me the opportunity to save a lot of money and be able to make a 20% downpayment when we did buy a house. The high percentage of people today who buy with little to nothing down is disturbing.
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I'll second the lack of need for a house savings. Between the ages of 18-25 I lived in Fairport, NY, Flint MI, Bethesda, MD, Ann Arbor, MI, Cincinnati, OH and in some cases lived places for as little as 3 months while I "discovered life". A house would complicate things. I traveled when I first moved to Cincinnati as well and even considered other moves before settling down around age 27.
My first house had a 401k loan tied to it. Save for retirement, using time as the largest reason why (time reduces risk and volatility). If kids have been taught well to be "cash flow positive" and save, getting a down payment in 6-12 months should not be an issue when they make that decision themselves.
For example if each of your kids saved 50k by age 25, they could retire at 68 with $3.5 M (assuming 10% growth).
For me, I need $218,000 saved by age 39 to reach same $3.5 M amount.
$3.5 M may sound like too much... 80k of income is $2M total... and inflation should puch the $80k present income to $140,000 with moderate inflation. Maybe you live on less, but the point of having time is one which favors your kids considerably.