Advice college graduates won't hear at commencement: "Strive for 25"

By Spencer Williams | June 6, 2016

As they set out into the working world, RCH President & CEO Spencer Williams counsels the Class of 2016 on the importance of developing good saving habits from the very beginning. Using the phrase ‘Strive for 25’ – Williams notes that the $25,000 retirement savings threshold is a critical milestone that all graduates should target.

Why $25,000? A study of mobile workforce behaviors conducted by Boston Research Technologies reported that cash-outs are primarily a function of wealth, not income. The study clearly demonstrated that those workers who amassed savings of $25,000 were much less-likely to have cashed out.

Williams further observes that the fastest way for graduates to reach $25,000 in retirement savings is to transfer their 401(k) balances to their new employer plan as they move from job to job, as opposed to cashing out or leaving their accounts behind in previous-employer plans. The practice of consolidation avoids savings-eroding fees, which can take become quite substantial over the course of a 40-year career.

Finally, Williams notes that help may be on the way in the form of auto portability – which can help preserve savings by automatically moving balances forward as workers change jobs.

While this may not be the kind of message typically heard in commencement speeches, it’s sound, practical advice that can pay off handsomely for millions of new graduates!