Young Americans underestimate how much they’ll need later in life.
Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…
The interesting study
Most Millennials – who for this study are defined as anyone age 20-37 – are starting to reach the age where they need to get serious about retirement planning and saving. With that in mind, the Insured Retirement Institute and Center for Generational Kinetics released a study in the fall of this year – Will Millennials Ever Be Able to Retire?
The big result
Unfortunately, the answer to that question seems to be leaning towards “no” – especially given that 7 in 10 Millennials seem to be drastically underestimating how much money they’ll need once they retire. According to the study, 70% of Millennials believe they will need less than $36,000 per year during retirement.
In truth, they’re undercutting the amount they’d need by at least 30%. The current national average for those ages 65-74 is $46,757, so the Millennials are under by 30 percent if they were to retire today (i.e. they’ll need more by the time they hit retirement).
The fascinating details
The study looked at considerably more statistics than just that one underestimate:
- 77% of Millennials believe reducing debt is the first step to saving for retirement
- While 68% of Millennials say they’re saving for retirement, only 29% are actively planning for it
- 62% of Millennials would like to have someone walk them step-by-step through the retirement planning process, that same 62% also don’t think they need to seek out a financial advisor until “they are at or very near retirement”
What you can do
If you’re a Millennial, it’s time to get real when it comes to retirement planning!
That means making a plan that doesn’t wait for total freedom from debt before it gets started. The money needs to be invested in a 401(k) through your employer or a private IRA retirement plan. You should also take time to talk to a financial advisor now so you can start planning for a comfortable retirement income now.
A financial advisor has tools and the knowledge you need to understand the ins and outs of retirement to make proper future budget estimates, so you’re not just guessing about how much money you’ll need. They can also help you plan for events that may come up between now and your retirement age that could slow down your savings, like getting married or having kids.
An advisor can also help you decide where and how to invest your retirement savings to ensure you can help your money grow effectively while weathering future investment market fluctuations. In any case, even if you decide not to talk to an advisor now, you need to start saving. And remember, if debt problems are standing in the way of your ability to develop an effective retirement strategy, we can help. Call Consolidated Credit today at 1-888-294-3130 or complete an online application to request a free and confidential debt evaluation from a certified credit counselor.