Over the past couple of months, we have offered some retirement information for the millions of Americans who are retiring or preparing to retire. Today, we would like to take a slightly different path and offer a little retirement wisdom for a younger generation, the Millennials. Like the older generations, Millennials have a lot to plan for and think through when it comes to retirement. The good news is, unlike their older coworkers, Millennials have significantly more time to begin thinking through their options and educating themselves on how to create the retirement of their dreams.
Millennials are designated as those who were born between 1981 and 1999. This cohort has already lived through a lot of financial changes at a young age due to the rise of debt, student loans, technological advancements, the housing crash and Recession of 2008; and most recently, the COVID-19 pandemic. For some Millennials, these events caused them to have a much slower savings growth and higher debt-to-net-worth ratio than the generation before them experienced at the same age. Student loans became more common for this generation due to the rising costs of education, and saving has become more difficult for some due to personal struggles.
As we stated last month, there is no one-size-fits-all approach when it comes to retirement strategy. This holds true even for the younger generations. Now is the time for individuals to begin retirement planning. For millennials, three pivotal questions can help light the way for retirement.
1. What Is My Retirement Lifestyle Preference?
Many Millennials can agree that they want a better quality of life than what they are currently experiencing. Retirement seems like a safe haven from the endless emails, stress, and lack of time that is typical in the workforce. However, this haven looks different for everyone. For some millennials, the ultimate retirement might consist of finally being able to travel extensively. While for others, the perfect retirement would be a quiet one spent surrounded by close family and friends. While neither of these ideals are wrong, they are very different and will take different types of planning.
2. How Much Longer Do I Need To Work?
While few people enjoy determining the number of days left before their vacation ends, most individuals are counting down the years until retirement with anticipation. Several federal employees even have a countdown timer on their computers that gives the number of days left until their retirements begin. This allows them to see themselves edging closer day by day. While viewing a timeline to see how many days are left before life after work begins, it is important to realize that this is also the hourglass of time left to prepare financially and emotionally for retirement. If you are unsure how much longer you must work to reach retirement eligibility, see our blog on the topic. You may be closer to retirement than you realize.
3. How Young Is Too Young to Begin Preparing?
In short, it is never. It is never too soon to begin thinking of when to retire. Take time today to sit back and think about what the ideal retirement looks like. Make a list. Define a timeline. Set goals. Begin taking steps to fund a retirement plan. Thirty years seems like a long time away. However, thirty or so years have already passed since many millennials were born. The hourglass will continue to lose sand. If planning does not begin soon, it could be too late for many.
