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Millennials: Tougher Road to Retirement than Parents?

Jeff Aldrich,

September 01, 2016

Retiring Your Way, Growing Your Wealth, Managing Your Money


The Millennial Generation (defined as those age 19-35 in 2016) now number 75.4 million, surpassing the 74.9 million Baby Boomer Generation (ages 51-69). They are much more diverse, with 44.2% of Millennials being part of a minority race or ethnic group. (Source: U.S. Census Bureau)
With longer life spans, the possibility of weaker investment returns, high levels of debt, stagnant wages, and higher living expenses, millennials might have to save more money over a longer time than previous generations. As company pensions have evaporated, many more of those just starting their career will need to fund their own retirement accounts than in past generations. Many millennials are skeptical about financial markets. They are nervous about investing within the stock market and feel more comfortable having their money in cash or fixed income assets. This uneasiness may be a byproduct from seeing their parents go through the Tech Bubble collapse in 1999-2001 and the Great Recession of 2008 - 2009.

High student loan and credit card debt make it difficult for millennials to budget for retirement savings. With low wage growth, underemployment, and retirement being 35-50 years away, saving for retirement can take a back seat to those higher immediate debt payments.

Millennials favor a lifestyle that’s balanced and flexible. Personal and social life is a higher priority than previous generations, where work, buying a home, and raising a family were most important. Millennials want to spend more of their time and money on experiences and enjoying life and tend to prioritize the present over the future.

Millennials may experience a curtailment of entitlements such as Medicare and Social Security. Although Social Security is likely to remain a source of income for millennials in retirement, many millennials are not counting on it. Now that’s not necessarily a bad thing, if it encourages them to start investing earlier.

Below are some retirement tips to consider if you’re a millennial:

  • Take full advantage of an employer match; don’t leave free money on the table.
  • Don’t wait to invest. Time is your best friend. The earlier you start investing in the stock market, the more your money will grow.
  • Investing too conservatively can cause you to miss out on potential investment growth. Historically the stock market has had an upward trend.
  • Don’t let debt be the reason to forgo investing. Start investing now, even if it’s a small amount.
  • As you advance in your career and your salary increases, don’t think your lifestyle has to. Increasing your deferral percentage is a good rule to follow.

  • Regardless of your age, it’s always important to review your portfolio and make sure that it aligns with your retirement goals. And if you are a Millennial, remember your retirement is in your hands!
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