Many Young Workers Spend Now, Save Later

Brett Bisciotti doesn't think it makes sense to save for retirement right now. He's 29, and wants to use all the income he can spare from his job at a delicatessen in Verona, N.J., to try to buy the place. "If you're not born with a silver spoon in your mouth and you want to make it, you gotta use the money you have now to go to the next level," he says.

Mr. Bisciotti believes the only way he'll make a decent living -- "not just 60 grand a year, but the pool, a little Mercedes, a timeshare in Florida" -- is to be self-employed. If his business is flourishing when he's 40, he says, he plans to start saving for retirement then.

Thinking about getting creaky and tired can be nearly impossible for those in their 20s. But our ideal net worth at 40 is an easier conception. That's why plenty of young people with a little extra money are ignoring the white noise of retirement dialogue and opting to invest in the much nearer future. The more money we spend now advancing our businesses and careers, the more money we'll earn at 40, when we start worrying about retirement. Or not.

Personal finance experts and financial services companies exhort us to start saving early, or else. "Even small contributions will grow dramatically," writes USA Today's Sandra Block. A retirement saving tutorial on the Web site of mutual fund family Vanguard notes: "The power of compounding can provide an amazing boost for those who invest over the long term." Some can't afford to save a penny for retirement until they pay off student loan debts, get a raise, or switch to a more lucrative career. But some of those who do have cash aren't convinced they should invest it in stocks or bonds.

Jascha Ephraim is a music composer, but at 24 he hasn't yet been able to profit from his talents. So he works part-time in construction, laying tile. Retirement is one of many financial plans he has put off thinking about -- indefinitely -- while he pays back credit-card debt from a concert tour and student loans from college. He says he'd rather work part-time and pursue his dream, than get higher-paying work that would let him sock away for later but undercut his commitment to music. "I have faith that if I put all my energy into doing what I love, I will be more successful than if I were doing something that makes more money now, but I hate," he says.

"I don't know what retirement is, or why people would do that," says Kit Steven, 28. Mr. Steven started two businesses that supply and install children's recreation equipment in parks. He loves working, and doesn't plan to stop -- ever. As for extra earnings, "I'd like to spend any extra on business growth rather than retirement," he says. The Oakland, Calif., resident says he does save money in case of a downturn, stored in a CD. But he doesn't have an IRA or a 401(k), and says his seven young employees don't want a 401(k), but would prefer he just give them any extra money he would contribute to match their hypothetical contributions.

"ALL of my current and future money will be going towards purchasing new properties," writes Rich Amundson, a real-estate agent, in an email. That means no tax-sheltered retirement accounts. "I LOVE IT so it makes it really easy and fun to be doing real estate to progress both my business and personal lives."

Mr. Amundson, 25, recently bought a co-op apartment in New York and a vacation home in Cape Cod, Mass. He says he put as little money down as possible. "It makes the monthly payments a bit higher but leaves more money for the next purchase." Mr. Amundson plans eventually to buy enough property to earn income from rents rather than the sales commissions he currently sustains on as an agent. After developing hotels and casinos, he hopes to retire by 40. "I can get better returns doing something I know, rather than letting somebody else put it in stocks that I don't know anything about," he says. Real estate "is actually a real thing, whereas a stock could just go down to nothing."

All of this energetic focus is compelling, but is it wise to shoot the moon?

If entrepreneurs invest all of their earnings in their businesses, they're in double jeopardy, says William Bygrave, a professor of entrepreneurship at Babson College in Wellesley, Mass. He acknowledges that this kind of risk is usually necessary to get a new business off the ground. But, "if you're putting all your eggs in one basket, you'd better watch that basket very carefully," he says. It's often seven to eight years before a business can be deemed viable; and after that the founder should consider how to protect their own personal money with diversified investments like buying a home and some mutual funds, says Mr. Bygrave.

Financial planner Ross Levin, president of Accredited Investors Inc. in Edina, Minn., says young people are famously overconfident. He compares those who plan to make it big as entrepreneurs to the legions of aspiring actors and actresses wandering around New York. Mr. Levin advises big shooters to at least fund a Roth IRA, since even a monthly pittance may accrue much compound interest between our 20s and 80s.

There are plenty of models for twentysomethings who plan to work forever, such as octogenarians Sen. Ted Stevens and Sumner Redstone. These prolific workers give the impression that they will work until the day they die. What are they thinking, and can we be like them too?

At 3 p.m. on July 3rd, as my colleagues trickled out of the office, I called Alan Patricof, a 72-year-old venture capitalist who's still going for the gusto.

"I don't think I ever spent one minute of my life thinking about retirement until I was in my late 60s, " he yelled into the speaker phone. "The word retirement, to me, is anathema!" Mr. Patricof, who co-founded Apax Partners and now runs a new venture fund, Greycroft Partners, said he is a type A personality who never wants to stop. "Look," he said, "I'm in the office, and most people I know are out in East Hampton at the beach."

Our 20s, filled with career, business and academic experiments, can be seen as the eight years Mr. Bygrave waits to evaluate a business's viability -- years of investment in ourselves for the future, not in the future for ourselves. I'm relieved, because I don't save for retirement either.