The economy has pushed millennials to the edge—will they fall or fly? Read on!
Over one-third of millennials feel that they will never be able to stop working. Many of them believe that, even though they want to retire before they turn 60, they will be performing some sort of casual job. A CNBC report revealed that 61% of millennials feel that they will be working a part-time job when they retire, with over 10% of them feeling unsure as to what their future is going to look like.
There are a few things to consider when discussing retirement for millennials. Firstly, the current state of the economy is not great for millennials. The cost of living is rising, and wages are stagnating, which makes it difficult to save for retirement. Secondly, many millennials have student loans and other debts to pay off before they can save for retirement. And finally, millennials are more likely to experience job insecurity and contract work than previous generations, which makes it difficult to plan for retirement.
Here’s a closer look at the hurdles facing millennials in their pursuit of retirement.
The curious and chaotic case of the economy
In these past few years, millennials have witnessed tremendous economic turbulence brought on by the Covid-19 pandemic, Russia’s invasion of Ukraine, the U.K. economy’s collapse (read: Liz Truss’s reign) and more. The concept of saving has been alien as prices soar and stipends remain the same. Plus, it doesn’t help that most of this generation entered the workforce during the 2008 Great Depression. Their savings have all but wiped out, leaving them with weak bank accounts and spirits. They have to start from scratch, and it is not looking pretty.
With news reports of Twitter’s massive layoffs and Apple’s hiring freeze doing the rounds, one thing is for certain: the recession is here, and no job is secure. It is everyone to themselves, much like in a zombie apocalypse, and retirement is a far-off thought. Seeing even the most in-demand professionals (such as software engineers) job hunt on LinkedIn after suddenly losing their jobs makes one wonder: how do you plan for retirement when you don’t even know what tomorrow will look like?
Drowning in debt
A 2022 study found that millions of Americans are drowning in student loan debt. They hold nearly US$2 trillion in student loan debt. Because of this, about 30% of millennials have put off their other financial goals, such as saving for retirement or even buying a house! There is a lot of pressure on millennials to save money for everyday things, putting long-term savings on the back burner.
Aptly then, a U.S. survey found that retirement is among the top financial worries for America’s millennials. While they’re counting on tax returns and cryptocurrencies to see them through their rosy years, reality paints a much different picture.
How can you start saving for retirement amid uncertainty?
You can adopt two approaches to saving for retirement, as per experts. They note that if you save about 15% of your pretax income, you will likely attain your goal. Other professionals advise saving a set multiple of your current pay by a certain age. Additionally, you can consider investing in stocks as a passive source of income.
According to a Morgan Stanley report, the best thing to do is to start saving now, even if you’re saving small amounts. Perhaps, it might be time to get a financial planner on board to help you out, too.
Whether millennials are going to be able to retire at their desired age or not remains unknown. However, not all of them are bummed about it. Some feel that it is more fun, and they will get to focus on doing the work they enjoy.
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