Millennials Face Tough Retirement Decisions
Many Millennials think retirement is so far in the future, it’s not even on their list of issues to worry about. However, statistics show that for these young adults, retirement could be a huge problem unless they start to plan early. Millennials will live longer, and require far more in retirement savings than their parents’ generation.
According to a recent CDC report, the life expectancy in America is now just under 79 years, the highest it’s ever been. This means that people will spend more years in retirement. As fewer employees offer traditional pension plans and Social Security benefits dwindle, Millennials are increasingly at risk of outliving their assets.
In another study conducted by Allianz, 61% of all respondents said they were more scared of outliving their assets than they were of dying. The retirement age for Millennials is likely to be 73, not 65. Unless they start saving early, Millennials can expect to keep working into their early 70s, and with a life expectancy for their generation predicted to be as high as 84, they should plan for at least 10 years of retirement.
Despite these facts, more than half (55%) of young adults say they plan to save “later” for retirement in order to ‘make up for not saving enough now.’ 27% are not currently contributing savings to a retirement plan or account.
Obstacles to Saving Now
- Self-funded retirement: Millennials know they have to figure out retirement savings on their own, and the number of young people enrolling in 401(k)s is on the rise.
- Lack of investment knowledge: Only 1 in 4 Millennials (26%) invests in stocks, and the reason is that they don’t understand stocks and the market.
- Student loan debt: The average class of 2015 graduate with student-loan debt will have to pay back a little more than $35,000. This debt load can make it tough to save for retirement early.
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