"They're asking, 'What's withholding? What's a mutual fund?' And they don't have any confidence in the system," Colarossi said. "There's a lot going on, and it's too difficult for them to commit.
"But we need to make them understand the benefits of an investment program," he added. The first risk, Colarossi said, is that many 20-somethings are not participating in the market. The second is that they are dealing with many time horizons.
Despite conventional wisdom, time is not on 20-somethings' side, he said. While they may have a small portion of their portfolio going to a retirement account, most of their portfolio is not "set it and forget it."
Because there are so many potential life events coming up within about five years for people in their 20s — weddings, graduate school, kids — there is a lot of short-term risk to be managed for this age group, Colarossi said.
30s risk: Not planning. Because one's 30s are a time for having children, buying a first home and being grounded in a career, it is the decade of truly beginning financial planning, according to Rick Kahler, CFP and owner of Kahler Financial Group.
"It's a time when savings absolutely has to happen," he said.
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Kahler recommends parents at this age establish two emergency funds for:
- Known and unknown future expenses, such as deductibles, accidents and things breaking down.
- Job loss in case of an extended layoff, saving six to 12 months' worth of living expenses.
These funds should be 100 percent safe, he said, and seen not as an investment but rather insurance accounts. Meanwhile, retirement accounts should be heavily into equity or equity-like instruments and broadly diversified.
"This is a good decade to do some internal exploration of your relationship with money," Kahler said. "If this saving doesn't happen within one year of hitting 30, then there's a problem.
"This needs to happen at the beginning of your career, before you get addicted to a lifestyle that you can't sustain."