66% of millennials have no retirement savings.
You read that right — if we had 100 millennials in a room (be sure to serve brunch, and we will come running) and asked them how much they had saved for their retirement, 66 of millennial’s responses would be “Excuse me?”
Furthermore, according to a study from National Institute on Retirement Security, only 5% of Millennials have enough saved for retirement — and certainly there’s a good portion that fall somewhere in between nothing at all and not enough. We share this fact not to fear monger, but to shed light on one (of many) issues facing the generation born from 1981 – 1996. After all, now is the time to take action.
It’s understandable, when you think why this might be. When speaking with CNN, millennials cited student loan debt, starting a business, jobs with low-wages and returning to education as several of the top reasons behind their lack of savings. While this does bode well for the ambitious nature of Millennials, being so laser-focused on cutting down debt and entrepreneurship prevents long-range sight and adequate preparation for the future. Its then vs now, and most often, now wins out.
Match that with the “I’ll never die” mentality that every generation has exhibited in their youth, and you’ve got a recipe for an unplanned, roller-coaster of a future.
Okay, so what? Everyone freaks out about retirement. What makes this time any different? For one, millennials with have less access to pensions, unlike their parents. Social security is, at best, uncertain. Millennials are living the longest of any generations, but medical costs have gotten higher too. Sometimes life can be tough, and it’s only going to get tougher.
There’s a certain reality to retirement planning, or the lack thereof, that doesn’t seem to garner much attention. The reality of not having a retirement plan, or not prioritizing it, means either a retired person goes broke, or they are working for the rest of their life. This begs several questions, such as: who will hire an elderly person whose money has run out at 80? Who will drive them to work? What about at 95, when working is not an option? Can you imagine never being able to rest on your laurels and enjoy the wealth you have accrued over a lifetime of dedicated work?
Even with millennials’ many other priorities, saving for retirement does not have to be a backbreaking endeavor. We’ve actually seen it happen where clients have increased their contributions, which lowered their tax basis, so they actually had more money in their paychecks every two weeks. It doesn’t have to be a true sacrifice: sometimes, it can be as simple as cutting back on daily spending, or taking advantage of an employer’s contribution matching program. If you do, contribute at least what your employer will match, but don’t limit yourself to that 3% — with that meager amount, you won’t be able to do much later in life. Your contribution should reflect the lifestyle you want. Of course, a financial professional would be able to help a person seeking retirement find space in their budget to do so, taking into consideration their unique set of wants, needs and expectations.
The next best thing that a Millennial could do for themselves is become educated. According to the Society for Human Resources Management, Millennials have less knowledge about employee benefits than previous generations did. With the internet and competent HR departments, there are a plethora of free resources to empower one to take control and ensure they will be secure — nay, thrive! — in their elder years. If you don’t know, now you know!
Are you interested in learning when your money will run out? Without that number, any sort of financial planning would be difficult and inaccurate. Call BARR Financial Services today to speak with a financial professional regarding your retirement future.