Here are some suggestions HR practitioners and benefits administrators can use to help their Gen Y workers start saving for retirement so they're not caught coming up short when their time comes.
The key focus is to help them create good habits. Having good money habits, especially as they relate to saving and investing regularly, will be one of the most significant factors in successfully creating financial fitness over a lifetime.
Focus on these four ways to get the ball rolling on saving for retirement:
Don't Let Them Be Haunted by the Past: While it's important to pay off student loans, Gen Y workers should divvy up their income into portions that will satisfy debt, investment and cost-of-living considerations.
Focus on Percentages, Not Dollar Amounts: HR should emphasize the strategy of investing a constant percentage of the paycheck and staying the course. As a result, dollar amounts will grow as income does.
Little Now Goes a Long Way Later: Ten percent here and there adds up, even when a younger worker's income is below the $40,000 mark.
Talk it Up: Suggest Gen Y workers speak with their parents about how they prepared (or are still preparing) for retirement and lessons they learned along the way.
Here is some other retirement-planning advice to offer younger investors:
* Get used to living on a little less now -- it will be a lot harder later on. If employees start saving when in their 20s, they have the opportunity to save enough for retirement while only saving a small percentage of their pay. If they wait until they are older, they will need to save a larger percentage.
* Failing to save enough results in a double-whammy: an addiction to spending more that results in even less saved in a retirement portfolio to fund the accustomed-to lifestyle.
* Beginning with their first job, Gen Y should consider setting their 401(k) contribution to at least 10 percent to 15 percent. They should convince themselves that retirement funds are untouchable. Yes, it takes discipline, but worthwhile goals are seldom easy.
* Once they hit their 30s, building the retirement nest egg will be a little tougher if they didn't start earlier, but it's still very doable.
* Track spending. Is it really necessary to spend $3 each day on a double mocha latte? Could life be lived without an expensive SUV (especially with today's high gas prices)?
* Take full advantage of an employer's 401(k) or other retirement plan, at least up to the point of any matching contribution. Consider the benefits of contributing to a traditional IRA or Roth IRA, if eligible.
* Try to put any bonuses or most of them into retirement savings.
J.P. Scott is a financial consultant for Charles Schwab, based in Sun City, Ariz.