Unlike some older generations, Millennials (people born in 1979 or later) have some unique challenges when planning for their retirement. These challenges can be overcome however, and with careful
financial planning, this generation can achieve their financial goals.
Bogetto & Associates can help and we have many years of experience helping younger people work toward their goals. Here is some information that Millennials can consider when planning for their financial future.
15 facts about Millennials' Retirement Readiness
In 2014, the Transamerica Center for Retirement Studies conducted a Survey of more than 1000 Millennials who were currently employed and the survey found some very interesting information:
- Seventy percent of Millennials are already saving for retirement and started saving at the unprecedented young age of 22 (median).
- Three out of four (76 percent) are discussing saving, investing, and planning for retirement with family and friends. Eighteen percent of Millennials “frequently” talk about it.
- Two-thirds of Millennials expect their primary source of income in retirement to be self-funded through retirement accounts (48 percent) or other savings and investments (18 percent).
- Four out of five (81 percent) are concerned that Social Security will not be there for them when they are ready to retire.
- Many (41 percent) expect that they will need to financially support aging parents and/or other family members when they are retired. Another 23 percent of Millennials are “not sure.”
- Sixty percent of Millennials plan to retire at age 65 or sooner, including 26 percent who plan to retire at age 65 and 34 percent who plan to do so even sooner.
- Fifty percent of Millennials plan to work in retirement and, of those, nearly half (47 percent) plan to do so for reasons of enjoyment or staying involved.
- Three out of four (76 percent) say that retirement benefits offered by a prospective employer will be a major factor in their decision on whether to accept a future job offer.
- Among Millennials who participate in a 401(k) or similar plan and are offered a company match, their contribution rate is 10 percent (median) of annual pay.
- The majority (62 percent) who are participating in a 401(k) or similar plan are using some form of professionally managed account such as a target date fund, strategic allocation fund, and/or managed account service.
- Seventy-one percent of Millennials participating in a 401(k) or similar plan find mobile apps for managing their retirement accounts to be helpful.
- Fifty-two percent of Millennials who provided an estimate of their retirement savings needs say they “guessed” what that figure should be. Just one in 10 have used a retirement calculator or worksheet.
- Three in five (61 percent) want some level of advice when saving and investing for retirement, yet only 32 percent who are saving actually use a professional financial advisor.
- Two-thirds (68 percent) of Millennials are “very” or “somewhat” confident that they will be able to someday fully retire with a comfortable lifestyle.
- Despite the confidence-shaking events of the Great Recession, Millennials’ household retirement savings dramatically increased from $9,000 in 2007 to $32,000 in 2014 (estimated medians).
7 Tips for how Millennials can save for Retirement
This study went on to present 7 ways that Millennials can save for retirement.
Start Now!
In order to reach your retirement goals, now is the time to start saving. Be consistent, avoid loans if possible and resist any early withdrawals from retirement accounts. Start a budget and keep to it!
Look at retirement benefits as part of your total compensation
If you are looking for a job, consider whether an employer is providing any retirement benefits. When comparing job offers, ensure you know about all retirement benefits being offered, and if there is not a current plan, consider asking for one.
Participate in employer-sponsored retirement plans if available
If you employer does offer a sponsored retirement plan, take advantage of it! Take full advantage of any matching contributions and put away as much as you can.
Write down your Strategy
Calculate the retirement savings you need (this can be complicated) and write it down. Have a well defined strategy and stick to it. You need to plan for living expenses, healthcare needs, what government benefits you expect, and long-term health care. Have a backup plan and re-look at your strategy periodically.
Get Educated
Education about financial planning is key. Whether you are doing research yourself, or relying on a Financial Adviser firm like Bogetto & Associates, knowledge will help you make informed decisions. Learn about Social Security and other government benefits.
Get Help if needed
See advice from a financial professional. Often an employer will have a company-sponsored financial adviser, but if they do not, seek out a reputable company like
Bogetto & Associates.
Be Proactive
The job market is ever changing and often at a very fast pace. Be proactive about keeping job skills up-to-date, take advantage of continuing education opportunities, and stay current on trends and marketplace needs.
Let Bogetto & Associates help you
Millennials may have entered the work force the Great Recession (2007-2009), they have been through the tragic events of 9/11, and have seen the effects of the collapse of the real estate market. Millennials also know about rapid technological advances and developments, and are comfortable with technology. However, many Millennials have left college with massive student debt, and may find it difficult to find any money to save. At
Bogetto & Associates, we listen and work hard with every client to find ways to work toward their financial goals. If you are a Millennial, we are the firm to contact. Let us help you.
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