These days, it feels like millennials are getting an earful from all sides about how they should buckle down and prepare for the rest of their adult lives, whether it’s regarding relationships, career advice, or money management. That last topic has been somewhat of a hot one for a few years now, as millennials constantly catch flack for spending money as soon as they get it, and not being focused enough on saving. That’s why recent news that the majority of millennials expect to retire at age 56 may come as a bit of a surprise.
According to the TD Ameritrade 2018 Millennials and Money Survey, the average age at which millennials expect to retire is 56 years old.
“Millennials are graduating at record rates, and it’s great to see that like most previous generations of college students, young people are optimistic about the future. On average, survey respondents expect to land a job in their chosen field and be completely financially independent by age 25,” said JJ Kinahan, chief strategist for TD Ameritrade. “This is a financially optimistic group that’s feeling positive about the economy, the job market and their own plans. However, they will need to develop saving and investing habits that will help them reach some pretty big goals.”
Most millennials expect to retire at age 56 https://t.co/zFdOLt0URP— FOX Business (@FoxBusiness) June 14, 2018
On average, millennials said they don’t plan to start saving for retirement until age 36, which may be over a decade after getting their first full-time job. According to Kinahan, “One of the greatest investments young people can make in themselves is to start putting money away in their 20s. Because of the power of compounding (Einstein called it the eighth wonder of the world), even with ups and downs along the way, those who start early potentially can end up with more in the end. Ideally, it would be wise to start right after college, and while some millennials certainly do that, we realize that’s not always possible. Understanding all of the available alternatives, like employer-sponsored retirement accounts or brokerage accounts, can be a step in a right direction. And, if you’re not sure, talk to someone. The sooner you can get started, the better your financial prospects may be.”
But this advice flies in the face of many young people’s lifestyles. Millennials tend to value experiences over things, and they want to have those experiences either now or in the near future. “Millennials aren’t spending our money on cars, TVs, and watches,” Taylor Smith, CEO and co-founder of Blueboard, a company that sells “experiential packages,” told CNBC. “We’re renting scooters and touring Vietnam, rocking out at music festivals, or hiking Machu Picchu.”
However, according to a new study by the National Institute on Retirement Security, 66 percent of working Millennials have nothing saved for retirement.
The study found that, for many millennials, nonparticipation in a retirement plan was a result of not working enough hours at their job, or not having worked at their company long enough.
Many millennials are still in school, with the hopes that obtaining a postgraduate degree will increase their chances of making a decent salary when they do enter the workforce. Others have graduated, but are allocating the majority of their extra funds toward paying off student loans with obscenely high rates. Then there are those who don’t have an employer 401(k) or a traditional pension, so they opt to save through other accounts, such as the Traditional or Roth IRA.
But there are some millennials who have hope for a big paradigm shift within their lifetimes. According to a Salon article, “many millennials expressed their interest in creating self-sustaining communities as their only hope for survival in old age; a lack of faith that capitalism as we know it would exist by retirement age; and that alternating climate crises, concentrations of wealth, and privatization of social welfare programs would doom their chance at survival.”
Alas, it seems that in the last several decades, capitalism has only widened the gap between the working class and the ruling elite. The quaint, middle-class families of yore are no more, as the economy has devolved into an ‘eat or be eaten’ situation. Many politicians and people of power seem to no longer act in the interest of the people, but rather in the interest of the powerful, often themselves.
The TD Ameritrade survey also found that of their millennial respondents:
- 53 percent expect to become millionaires at some point.
- One in four said they don’t expect to get married, and 24 percent don’t expect to own a home.
- 30 percent don’t expect to have kids.
- Two in ten said they’re never going to be able to pay off their student loans.
- 17 percent haven’t yet achieved financial independence from their parents.
“Millennials are a generation that has vastly different attitudes and habits than previous generations. So naturally, their lives and financial milestones after college may look different as well,” said TD Ameritrade chief strategist JJ Kinahan.
What do you think? Are millennials well-equipped to carve a niche a prosper in this uncertain economy, or are they doomed to be crushed by the system? Only time will tell.