Rescue Yourself From Reckless Saving

My parents' generation had a thing called childhood. Apparently it was great because they didn't save any of it for their kids.
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I got a lot of positive feedback on my first column.

Here's a representative sample: "What an ass you are. If you are typical of our recent college grads, God save us. Your hedonistic attitudes violate all principles of self-discipline, responsibilities to others and maturity."

My friend, flattery will get you everywhere.

Many of you thought I was being reckless and irresponsible when I advised young people not to save money. I couldn't disagree more strenuously. There's no percentage in being a paragon of self-restraint and spending discipline while you're in your early 20s.

I'm not advising anyone to go out and spend every last cent on a stereo or some sweet rims.

Telling young people to be circumspect about their savings isn't the same as telling them to be financially irresponsible. It's responsible to enjoy yourself, it's irresponsible to devote every second of your life to retiring comfortably, even at the expense of being happy in the present.

It just so happens that others agree with me. Laurence Kotlikoff has serious credentials and he's saying the same thing,

people are saving too much for retirement. As the great George Allen -- the football coach not the senator -- put it, "the future is now."

If anything, you're taking a dangerous and unnecessary risk if you try to be disciplined about money in your 20s. The risk is that you might make it to 30 or 40 without ever having had a prolonged period of irresponsibility in your life. And it's not just your youth that's at stake, it's your future.

If you spend your 20s grinding away, trying to follow all the financial disciplines that we're told make you a responsible adult, you'll never get the recklessness out of your system.

What happens when you hit 40, realize you wasted the one window of opportunity you had to lead a carefree existence, and then squander your nest egg trying to recapture your lost youth? This is a whole lot more common than you'd think, as the legions of divorced middle-aged people trying to live it up who now infest suburban New York can tell you. At 40, there are probably other people depending on you -- now you're screwed, and so are they.

This is when the baby boomers tell me I'm 22, and I don't know what I'm talking about. If it really pays to be irresponsible when you're young, shouldn't we hear that from someone who's 50, whose life is a great big piece of anecdotal evidence illustrating my point?

That can't happen, and I'll tell you why. My parents' generation had this thing they called childhood. Apparently it was pretty great because they didn't save any of it for their kids.

People over 40 forget that they got to enjoy themselves in high school. Thirty years ago, when it was easier to get into a good college and your parents didn't care all that much anyway, there was a window in which people could be as reckless and irresponsible as they wanted. From 14 to 22, you could afford to be irresponsible, or so I've heard. Then you got out of college and started your life as an adult.

It hasn't worked like that for a long time. When you spend high school having to participate in extracurricular activities because they're good padding on the college application, it's not the greatest time of your life.

It's a time of rigid discipline and responsibility, and I don't just say that because I had a miserable time in high school. I say that because everyone I know had a miserable time in high school, and college isn't a 24/7 party anymore either.

People who got to be immature when they were immature don't understand what a difference this makes. I watched so many of the kids I grew up with burn out dealing with the pressure in high school, and for a lot us, our time in college is even worse. Whoever heard of anyone burning out in school 30 years ago? One of my best friends in school had a roommate named Peter who was a year a head of me.

The guy had worked his ass off in high school to get into Harvard, and he was a straight-A student up until his junior year. Then he fell apart, stopped going to any of his classes, stopped doing work, and then eventually even stopped trying to fabricate excuses about this or that illness to get away with his behavior. He stopped caring. The guy had never had fun and he couldn't take the pressure anymore. He had to take a year off, and when he came back he was so frazzled that he barely managed to graduate.

Does that sound like

Animal House

to you? In the old days, college students smoked pot; these days people take "study drugs." Drug use, the most irresponsible behavior known to man, is now about discipline and good grades.

You get to high school and you're immediately forced to spend every second of your life trying to get into college. You get to college and the competition for high-status, high-paying jobs means that from day one, everything you do is about getting a job or getting into grad school. You finish school, and immediately you have to start saving to buy a home or pay for a family? Try it and I give you 50-50 odds you'll snap.

It's no coincidence that all the parents who used to tell me and my friends that they regretted not having more fun when they were young six or seven years ago are now divorced and behaving terribly. These guys (most of them are men, but I'm sure the gender distribution of middle-aged burnouts from my generation will be more equitable) spent their young lives earning lots of money and saving so they could live in the posh, if culturally impoverished, suburbs of northern Westchester, then they hit 40 or 50, leave their families, get a girlfriend or three, and blow all their retirement savings trying to buy back their youth.

I don't believe it's safe or sane to make the transition from overscheduled, overworked student to financially responsible adult without at least a few years where you aren't under pressure. Do you seriously want to start contributing to your 401(k) when you're 22 or 23?

There's something heartbreaking about that idea. I wouldn't be shocked to hear some of my friends who graduated from college with me last Thursday start saying things like, "Sorry guys, I'd love to go out for drinks but I need to save money in order to max out my IRA contribution." That's sick!

In fact, I think saving your money might even be short-sighted. How will things really look 40 years down the road? Are we looking at a cornucopia or a catastrophe? A robot replete paradise, or Road Warrior Ragnarok? Who can honestly make a plan in 2007?

Things are likely to be very good or very bad in 2047, but either way, that $800 cash money in your pocket you'll have by virtue of your self-restraint in socking away $100 tomorrow night won't matter one bit to you. It certainly won't cover all the therapy you'll need because you spent your youth as a completely self-disciplined grind.

If you really believe you can get through your 20s like that and not be absolutely miserable later in life, be my guest. I'd rather play it safe, do the responsible thing for the long term, and spend some money while I'm young, before it's too late.