Reason 1: The Obvious Problems (It’s Expensive Out There!)#

A lot of the issues are just the things you see happening around you:

• Inflation has been super high, the highest in about three decades.
• Millennials started their careers after the worst financial crash in a century.
• The cost of college is going up eight times faster than wages. Most young graduates start off with a five-figure debt before they even get their first paycheck.
• Renting even a one-bedroom apartment is now too expensive everywhere in the country for someone earning minimum wage.
• Saving up for a house is almost impossible in the expensive cities where good jobs are.

Let’s look at a specific example:

• A New Yorker with a college degree would need to save intensely for 7.5 years just to have enough for a down payment on an entry-level apartment.
• This dedicated saving can only start after paying off student loans, which now takes about 20 years on average.
• After buying that entry-level apartment, they still have a 30-year mortgage.
• If this person started working at 22, they’d be 79 years old before they were a debt-free homeowner in New York, in this ideal scenario.
• Things like starting a family, getting sick, or earning less than the average college grad would put them even further behind.

And that’s just Reason One!

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Reason 2: People Don’t Care or Just Avoid Thinking About It#

Another big reason people won’t retire is that, well, they either don’t care enough yet, or they just plain don’t want to think about it. As humans, we’re really good at putting off problems we don’t want to deal with, and retirement planning fits right in there.

Most personal finance experts (and even folks online pretending to be experts) will tell you the most important time to start planning for retirement is in your early 20s, right when you get a professional job. Ideally, you could even start before that, maybe by working part-time in college so you don’t start your career with too much debt.

On paper, the math makes sense:

• If someone wants a 30-year retirement after their career ends.
• And they want to live on $50,000 a year during that time.
• They would need about one million dollars in well-invested money to make that income.
• Assuming average market returns (like the last 100 years, about 10% per year on average).
• But, after tax and inflation, that 10% turns into roughly four percent returns.
• People planning for a longer retirement often follow the four percent rule, based on a Trinity study. This rule says if you only spend four percent of your portfolio’s value each year, it should last forever, with investment returns covering your costs.

However, we’re talking about average people planning for an average retirement. $50,000 a year is considered a comfortable amount for most people to enjoy their later years.

Here’s how much you’d need to invest each month to reach that $1 million target by age 65, assuming those average market returns:

• If you start at 20 years old: You’d need to invest just $100 a month.
• If you wait until 30 years old: You’d have to invest almost $300 a month, which is triple the amount needed if you started earlier.
• If you wait until 40 years old: You’d have to invest $800 a month.

Saving $800 a month might be possible for some people, but someone with that much extra money probably wouldn't be happy living on just$50,000 a year in retirement anyway.

“I’m golden baby!” “You can’t do anything with five Greg… Five’s a nightmare is it?” “Oh yeah, can’t retire, not worth it to work. Oh yes. Five will drive you Un Poco Loco, my fine further friend.”

Starting early is clearly important, but making sacrifices now for something 45 years away just goes against how most people are wired. And it’s not totally illogical:

• 20% of Americans don’t even live to 60.
• Many more might be too sick by then to really enjoy themselves, no matter how much they saved.

For a lot of people, seeing the world and hanging out with friends in your 20s feels way more valuable than having a nice room in a senior living place later. Life isn’t guaranteed, and money spent on experiences is usually not regretted.

Young people are traveling overseas much more than previous generations. A survey found 74% of Millennials said they never expect to be able to afford a home. Since they feel they have nothing big like a house to save for, they’d rather spend their money on experiences.

When the economy isn’t great, and wages aren’t growing, people aren’t thinking decades ahead. They’re thinking, “How do I keep my home right now?”

Some might call this irresponsible or a “YOLO” (You Only Live Once) attitude, and maybe that attitude won’t feel so casual when you’re still working at 70. But there are other risks to planning long-term that some strict personal finance folks don’t consider.

Word among financial analysts is that market returns over the last century might have been higher than we can expect in the future. While these analysts are often wrong, there’s still no guarantee that sticking to a retirement plan will give you the results you expect if you’re basing calculations on past performance.

So, even if you’re in the 80% who don’t die before 60, and the 60% who are healthy enough to enjoy retirement, there’s still a risk your savings won’t be enough for the life you thought you’d have. If the whole point of money is to make your life as fulfilling as possible, maybe spending money now is the safer investment.

You might ask, “Why can’t people just do both?” That’s a fair question, but the answer for many is simple: they just don’t have enough money. It’s tough to save in general, let alone saving for retirement after covering essential bills, maybe a house, and having an emergency fund.

Sure, some people waste money, but generally, Millennials and younger generations are actually more aware of where their money goes than older generations. They know what they spend money on; they’re just choosing different things to prioritize.

If someone earns $50,000 a year, maybe **$100 a month after taxes** is all they have left after paying for necessities. Choosing a $1200 summer vacation every year at that point isn’t necessarily reckless spending; it’s choosing to live life.

And yes, a lot of people don’t even save up for those expenses. A Lending Tree survey found that over a third of people went into vacation debt last year, averaging $1,249. That’s almost exactly how much money the average 20-year-old would need to save for the entire year to have a comfortable retirement at 65.

Reason 3: Even If You Try, You Might Mess It Up#

The third reason you might work until you die is that even if you make sacrifices to save, you might not be good at investing anyway.

While the market has returned an average of 10% per year over the last 100 years, the average investor has only achieved a return of 4.25% in the same period, according to research by Dalbar Inc.

Why is this?

• Mistake 1: Buying High and Selling Low. People buy into investments when they are hyped up. Kathy Wood’s Arc Innovation ETF, for example, has had similar returns to the S&P 500 since it started, but it’s been a net destroyer of wealth for most people. Why? Because people bought in when it was performing way better than the market, usually after hearing about it in the news after it had already made big gains. “I think the Kathy Wood is the kiss of death.” The Innovation ETF itself was just other overhyped companies that people bought after hearing stories of small investments making millions. This is all about FOMO (Fear Of Missing Out) – if others are getting rich, you don’t want to miss out. People also just like being part of the trend.
• Example: Meet Kevin. This person picks on “Meet Kevin” a lot on this channel. His viewership dropped a lot after he said he was selling the investments he’d spent years promoting. Those investments worked well for him, but people weren’t interested in watching once he stopped confirming their belief that they would get rich buying based on questionable financial analysis.
• Desperation: Part of chasing big investment gains comes from desperation. Many young people realize they’ll never afford a house or even retire if they do everything “right.” So, taking a gamble on something people online say made them rich feels worth a shot. It’s like a lottery ticket that could cost thousands of dollars.
• Day Trading: For the same reason, people try day trading. “Gurus” say you could make thousands a day, but you’re much more likely to lose all your money.
• Fraud: Fraud hurts average investors badly. People using services like FTX to buy crypto (a risky asset type that could make you rich fast) are unlikely to get their money back. Losing a chunk of their portfolio puts them behind financially and might make them just say ”[__] it” and give up on saving, like the people in Reason 2.
• Investing Too Much Now: This sounds crazy, but if you put all your extra money into investments, it’s hard to pay for big unexpected costs without having to sell investments. Unexpected expenses, like losing your job, often happen during bad markets, forcing you to sell stocks when they are low after you bought them high.
• Getting Scared: Normal people get scared. Everyone talks big about investing long-term until they see their portfolio drop 20% in a week. That little voice telling you to sell and buy back when the market hits bottom is very hard to ignore. Some listen, most miss the bottom, and end up buying back at a higher price than they sold for, losing money trying to “save” their account.
• It’s Boring and Slow: Saving and investing for retirement is just plain boring and slow. Many people can’t focus on a short TikTok video without something else (like Subway Surfer or Minecraft Parkour) playing simultaneously. Putting a bit of money into a retirement account every month for 45 years is a huge commitment. As the money grows, it gets harder to say no to all the things you could do with that money instead of saving for a day you might not even see.

Whatever the reason for the average investor’s poor performance, it totally changes the math for retirement.

• To get that same $50,000 retirement income** (after tax and inflation), someone only getting a **4.25$2.5 million saved (not including their main home).
• Saving $2.5 million is much harder with lower returns.
• If someone got market returns (10% average) and started saving at 20, they’d need to save $100 a month. This isn’t super easy, but with some focus, most people could do it.
• But using the more realistic 4.25% return numbers, that same person would need to save $1500 a month**, or **$18,000 a year.
• Saving $18,000 a year is just **not possible** for someone earning$50,000 a year.
• And anyone earning more would have to be okay with spending a lot less in retirement than they did while working.