As a millennial, you might wonder if retirement savings are even worth it. Especially when there are other things to save for, like a down payment on a house or your children’s college tuition, however, one of your top priorities should be to save for retirement.
Around 58 percent of Millennials have a retirement savings account. Like Baby Boomers and Gen Xers, Millennials know how much money they will need to retire. Millennials start saving for retirement at an average age of 23.
It turns out almost half of all millennials are actively saving for retirement. That’s great news! If you’re one of them, keep up the good work – you’re on your way to a secure future. But if you’re not among the ranks of millennial savers, now is the time to get started. You can easily get on track and start building your nest egg with a little effort. So why are you waiting? Get started today!
What are Millennials Known For?
Millennials are the most researched and discussed generation to date. They are the first in human history to have grown up entirely immersed in a world of digital technology. This history has molded their personalities and established long-term political, social, and cultural viewpoints.
Many Millennials face criticism for not saving enough or not saving at all. But it looks like that’s starting to change. The study found that nearly 60% of Millennials are now saving for retirement, which is a huge increase from previous years. This news is great. Millennials are subject to criticism for not being prepared for the future. The financial stress of retirement is still a significant concern for many people. Still, it seems like the Millennials are taking this into their own hands.
Millennials have often faced criticism when saving money to prepare for future years’ expenses. Now data shows us otherwise as studies show how much progress these young adults make on meeting goals. Unfortunately, some things don’t last long. Millennials should think about adding some retirement savings into their monthly budget if they want to enjoy a comfortable retirement later on in life.
Millennials and Retirement How Bad is It?
The majority of respondents aged 40 and above were pessimistic about their retirement prospects. Millennials and Generation X are the most gloomy. Unfortunately, the objective of 401(k) accounts is not to handle everything in retirement. Traditional savings accounts have had higher fees, lower rates of return, and put more risk on the shoulders of individuals. Millennials are now the most highly populated generation in American history, accounting for roughly one-quarter of the total population. Millennials have been criticized for being financially irresponsible, especially Millennials without student loans. In addition, millennials face the accusation of living at home with their parents and spending a lot of money on expensive luxuries. However, according to a recent study, Millennials are finally taking retirement seriously. Almost 60% of Millennials are now thinking about retirement.
It is excellent that Millennials finally realize how important it is to save for retirement early in life. Despite income levels and the progress made over the past decade, many Millennials will not retire until they reach their 70s or 80s. Millennials may be facing a much more challenging future than previous generations as far as retirement goes. This challenge is due to the low-interest rates and costs associated with traditional savings accounts today. Young people are more likely to save enough for retirement through company plans than earlier generations. Millennials are also saving for retirement by maxing out the $18,000 limit for Individual Retirement Accounts (IRAs). Millennials who do not have access to employer-sponsored plans, such as Millennials who work freelance jobs, will most likely use Roth IRAs.
How Much Does the Average Millennial Need to Retire?
The average Millennial will need to have around $1.2 million to retire comfortably in the United States. This amount of money may appear to be a large sum, but it is critical to begin saving as quickly as possible. You’ll be able to harness the full potential of interest over time if you keep saving while you’re young. So don’t wait; start saving for retirement today.
The average Millennial does not save enough for retirement, and the problem is worse than expected. Only 36% of those actively participating in their financial plan set aside 9 percent or $5,000 per year—a figure that’s well below what would be needed if we’re going by traditional standards
Of course, some manage more, but this study shows how much pressure these people are under already. With an income exceeding $55,000, most Millennials can’t justify putting away less than 10%.
Most Millennials say that they would like to save enough money for retirement by the time they’re 37 years old. While this is a lofty goal, it’s possible if Millennials make the right financial choices today. For example, millennials can start saving early and take advantage of employer matches. These matches can set themselves on track toward retiring with plenty of money in their accounts when they choose to stop working.
It’s also vital for Millennials to do some research before selecting an IRA or 401(k) provider; fees can significantly impact your total returns over time. You want to ensure that you aren’t paying more than you should be for your investments, considerably if you’re automatically investing by way of a 401(k) or IRA. Millennials interested in working with an independent financial advisor may be able to potentially save thousands of dollars over time – for both their investments and retirement planning advice.
How are Millennials Investing Their Money?
Although 80% of younger Millennials understand investing, they are less likely than prior generations to put their money into mutual funds (29%). Indeed, ETFs have surpassed pensions as the most famous investments among millennials. Millennials were also more likely than Gen Z to invest in exchange-traded funds (ETFs). ETFs were chosen over mutual funds by 23% of the Millennial generation, compared with 15% of the Generation Z.
Millennials are also putting a large percentage of their savings in cash (38%). Millennials in the workforce for more than ten years were surprisingly less likely to invest in ETFs when compared with Millennials with shorter tenure. For many Millennials, cryptocurrencies have become a popular investment vehicle.
While Millennials seem to be making strides in saving for retirement, there is still work that needs ahead since nearly 60% of them are socking away money for later use. We can’t expect Gen Z’s habits to change so quickly.
How Much Money Do Millennials Control?
According to a report from portfolio manager Financial Engines, millennials now own just 4.6% of the country’s wealth. As a result, Baby Boomers were four times as well-off at the same point in their careers as Millennials. With a net worth of $97 billion, Mark Zuckerberg owns 2% of all Millennial money. Millennials have the worst wealth distribution compared to previous generations, which is why there isn’t much of it. This comparison implies that Millennials’ don’t have a lot to of money begin with, and this concentration of money is just as bad as everyone else’s.
