My daughter is a great kid. She does have one major flaw, however: At 13, she has yet to begin planning for her retirement.
Oh, I know what you're thinking. What about her education? Or building a career, starting a family and all that other stuff?
Sure, they matter too. But in the eyes of the financial industry, the big priority is retirement planning. And my teenage daughter is already falling behind.
At least that's the message I take from Vanguard's announcement on Thursday that it is launching a fund in the United States aimed at folks who will retire in 2065.
The new product continues an industry-wide trend toward so-called target-date funds. Many vendors already offer a wide array of these products for people planning to leave work in a specified year.
Such offerings can make a lot of sense. They typically provide investors with low-cost portfolios that adjust automatically with passing time – lots of stocks when you're younger; more bonds and other safe investments as you age and the target date draws closer.
However, looking ahead to 2065 – or even 2060, as a few existing funds already do – may be pushing the concept just a bit too far and creating needless anxiety as a result.
The natural clientele for such funds are people born around 2000. With all due respect to fund providers, teenagers and young adults have other worthwhile priorities that can and should come before retirement planning.
That's a notion many financial-service firms don't like to hear.
The industry loves to tout the merits of starting to save young. The math is indisputable – that is, if you have excess money. Dollars invested in your teens or twenties have longer to compound and can produce a much, much bigger retirement stash than money you save in your forties or fifties.
But few of us manage to save much for retirement during our first 25 years – or even 35 years on earth – and we're not dooming ourselves to ruin as a result. Statistics Canada's most recent surveys of household wealth show that the median family headed by someone 35 or under has a mere $25,300 in net worth in 2012.
Malcom Hamilton, an actuary and retirement expert, once commented to me that the most rational sequence of financial goals bears little resemblance to how people actually live.
In an ultra-logical world of long-lived savers, people would first amass a retirement fund that could grow over the years to come. They would then buy and pay off a house. Finally, they would have children.
In reality, of course, most people follow exactly the opposite sequence. And that is unlikely to change – at least not so long as human biology remains the same.
Given that pattern, smart financial planning ranges further than merely mixing stocks and bonds.
It weighs the value of paying for more education. It also looks at the surprisingly strong case for paying off your mortgage before diving into a wider array of financial investments. And it realizes that enjoying your working years, and your kids, is a worthwhile goal too.
Keep that in mind when contemplating target date funds that aim nearly five decades in the future. They are useful tools for that tiny group of supersavers who are thinking about retirement at an age when most of us are thinking about getting a date, but they're not complete financial plans.
So long as you spend your early years building wealth in some way – and that can come through education or home equity instead of the stock market – you don't have to beat yourself up. At least, that's what I'm telling my daughter.
Ian McGugan