A new study finds that college-educated Millennials won’t be able to retire until age 73, more than a decade later than the current average retirement age of 61.
Millennials may be in the first blush of their careers and optimistic about their financial futures, but that doesn’t mean that when to retire is a question they are ignoring. Belying the stereotype of Millennials as an entitled generation, they are instead taking action to save for retirement.
A Transamerica Center for Retirement Studies retirement readiness report released last June found that two in three young employees are committed to or have the ambition to save for retirement, while one in four ‘always make sure’ they are saving for the future. Two in five intend to begin saving soon and three in five understand that while retirement saving is important, they don’t feel they earn enough yet to begin saving.
Almost two-thirds (62 percent) are confident they will be able to fully retire with a lifestyle they consider comfortable compared with 53 percent of baby boomers and half of Gen Xers. They are also least likely to expect having to work past age 65 (44 percent vs. 57 percent of Gen Xers and 62 percent of baby boomers).
They might want to rethink that. A new study by Nerd Wallet finds that college-educated Millennials won’t be able to retire until age 73, more than a decade later than the current average retirement age of 61.
The survey also cautions:
· Given a life expectancy of 84, grads will only have 11 years to enjoy retirement
· The median debt load of $23,300 will cost students more than $115,000 (in today’s dollars) by the time they retire
· Employer 401(k) matches comprise 50 percent of retirement savings
When to retire and being able to retire as planned are primary concerns of six-in-ten Millennials and Gen Xers, according to a wealth level study conducted by Spectrem’s Millionaire Corner of households with a net worth between $100,000 and $1 million (not including primary residence). The highest percentage of youngest respondents (34 percent) expect to retire between the ages of 63-65.
These respondents were also more likely to make a priority getting adequate help to allow them to reach their financial goals (38 percent vs. 31 percent of respondents overall).
Millennials and late Gen Xers represent an opportunity for financial advisors to help them establish when to retire and make a plan to save toward that goal. Just over one-third (37 percent) surveyed by Spectrem’s Millionaire Corner have received advice about planning for retirement compared with 44 percent of respondents overall. But 26 percent (compared with 17 percent overall) said they will seek this advice.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.