The majority of Millennials are saving for retirement, but does that mean they’re on track to enjoy a financially secure retirement? According to a new national study recently issued by the Insured Retirement Institute (IRI) and The Center for Generational Kinetics, Millennials are falling short when it comes to planning for retirement, and this might have some big implications for their future financial security.
The report found that while 68 percent of Millennials – Americans currently aged 20 to 37 – said they are saving for retirement, only 29 percent indicated they are actively planning for retirement. At the same time, many Millennials may be developing unrealistic expectations about life in retirement. For example, the report found that most Millennials seriously underestimate how much money they will need for their golden years. Seven in 10 Millennials said they will spend less than $36,000 per year in retirement, which is 30 percent less than the current national average – $46,757 – for those currently aged 65 to 74.
“This study debunks the myth that Millennials are not thinking about retirement,” said Jason Dorsey, Millennial Expert, President, and Co-Founder of The Center for Generational Kinetics, who recently presented the research findings during a standing-room-only event on Capitol Hill. “However, Millennials are taking a much different approach to retirement planning than previous generations, and it’s not a very realistic one. There’s plenty of time for Millennials to get back on track, but it will require them to take a more active role in the planning process.”
More than a quarter of Millennials participating in the study said they are counting on either winning the lottery or receiving gifted money to fund their retirement years. In addition, 56 percent of Millennials believe they will not be able to retire when they want to, with 28 percent thinking they will never be able to fully retire. Moreover, the majority of Millennials said that planning for retirement is more difficult than maintaining a diet.
“These sobering statistics seem to be indicative of a generation that is struggling to manage competing financial demands,” IRI President and CEO, Cathy Weatherford, said. “Many Millennials are still juggling student loans and other debts, and so planning for retirement is not their top financial priority yet. But preparing for retirement is a career-long enterprise and Millennials will be well-advised to start focusing on the task sooner rather than later. To get started, Millennials should determine a savings goal and develop a plan to get there.”
The report offered tips to Millennials to help them better prepare for a financially secure retirement.
- Save each month for retirement and invest your savings. Even small amounts will build up and grow over the course of a career.
- Commit a percentage of your earnings to your retirement savings rather than a fixed amount. As your income grows over time, your retirement contributions also will increase – allowing your savings to build up faster.
- Meet with a financial professional who can help you to plan and meet your long-term financial goals. You can benefit from their expertise and expand your financial IQ along the way.
Click here to access the study.