As the largest generation in America - outnumbering baby boomers by nearly 8 million people - millennials are the retirees of tomorrow. Highly diverse in ethnicity, millennials are also quite different in how effectively they're preparing for retirement, two newly released surveys suggest.
Nearly 60 percent of millennials are taking proactive steps to help them financially prepare for life after work, according to a recent survey conducted by financial education firm Ramsey Solutions. In fact, close to 40 percent of 18- to 35-year-olds say they've already figured out how much they'll need in order to sustain their lifestyle in retirement.
"Millennials' retirement savings are on par with baby boomers'.
Retirement calculators and the advice of financial advisors enable millennials to more adequately determine the amount they need to save to retire comfortably. With even the eldest millennials still at least 30 years away from their mid-60s, it may not be surprising that over 60 percent of 18- to 35-year-olds have saved $10,000 or less, the study found. However, this is right around the same amount of earnings that baby boomers have collected, on average, even though they've had more time to shore up their retirement nest eggs.
Chris Hogan, Ramsey Solutions spokesperson and a leading financial expert, said that the takeaway from this study is reassuring, as it certainly appears that millennials are being proactive.still at least 30 years away from their mid-60s, it may not be surprising that over 60 percent of 18- to 35-year-olds have saved $10,000 or less, the study found. However, this is right around the same amount of earnings that baby boomers have collected, on average, even though they've had more time to shore up their retirement nest eggs.
"But while Millennials have a great chance of having a secure retirement, they still need to focus on eliminating debt and maintaining a balanced lifestyle so they are able to increase the amount they are saving for retirement," Hogan explained.
Part of the reason why retirement-minded millennials are saving as much as they are may be due to their insecurity about Social Security and whether the government entitlement program will be sufficiently stocked when the time comes to collect. Only 30 percent of millennials in the survey said they anticipate Social Security representing some or all of their retirement income once they leave the workforce. This compared to over half of baby boomers who expected the same.
Just 22 percent of millennials are saving anything
Meanwhile, a separate survey comes to very different conclusions regarding how adequately millennials are preparing for retirement. Commissioned by the financial professional association Million Dollar Roundtable, the poll found that only 1 in 5 millennials are saving anything at all for the cost of living once they call it quits from the working world. Complicating matters further, the average age in which millennials expected to retire is 62, according to the survey. This age is in line with what other studies have shown on when Americans actually do retire, as Gallup found that 62 was the average in 2014.
"Millennial expectations to retire at a younger age than their predecessors does not match with their lack of financial action," warned Brian Heckert, MDRT president. "While most say it's a priority to focus on planning, less than 10 percent have actually started doing so."
He added that the earlier millennials put together a financial plan, the better off they'll be later on, helping them better modify their plans according to the cost of living and what expenses come to the fore.