Younger Generations Views on Retirement – Will They Ever Plan?
Although as many as 1 in 3 Americans have absolutely zero funds saved towards their retirement years, it’s quite surprising to note that most of those who don’t have anything saved aren’t actually Millennials. In fact, more than 50% of the Baby Boomer generation has admitted that they haven’t bothered to save anything for retirement because they are relying solely on Social Security payments to provide their income when they stop working.
Millennials Starting to Save Earlier
While many Baby Boomers only started thinking about their retirement years and saving towards them in their late 20s or even early 30s, it’s surprising to note that the Millennials who are currently saving for retirement started to do so at around age 23 – far younger than any other generation so far. This means that they in fact will be able to take the most advantage possible of the compound interest that could accrue in their 20s.
More Employer Support Needed
A large number of Millennials realize how important retirement savings are. However, many of them are not being provided with the option of signing up for an employer-based retirement plan that sees companies contributing towards part of the premiums. Fewer companies than ever before are providing this perk to employees these days, making it more difficult than ever for Millennials to save enough for their golden years. The Center for American Progress noted, “Millennials’ future economic security depends on their ability to put away a portion of their current paychecks for retirement. Millennials know that saving for the future is important, but too few are able to do so.”
Planning to Work Longer
Although it used to be the norm for workers to retire anywhere from age 50 to 60, more people than ever are delaying retirement until their late 60s or even 70s because of financial constraints. It has been noted that significantly high levels of student debt remain one of the main reasons why Millennials will most likely need to work for longer than any other generation out there. Although many Millennials plan to retire from their main careers earlier than this, the difference between them and most of the Baby Boomers is that up to 50% of them intend to continue working part-time.
Different Spending Habits
Spending habits of Millennials also differ to those of previous generations in that they tend to spend more on entertainment and smaller retail purchases. However, they also tend to be more frugal with their finances than Baby Boomers in most cases in that they make fewer large purchases. Many Millennials have also opted out of owning properties because they prefer to have more options available to them.
Up to one-third of Millennials are concerned that they may run out of money after they retire. However, this worry and stress can often be averted if they are able to obtain sound financial advice and start saving as much as they can as early as possible.