Millennials Optimistic on Retirement Age – Lifespan, Not so Much

Millennials – those born between 1980 and 1997 – expect to retire earlier than any other western market globally – but they don’t think they are going to live as long as Boomers or Gen X.

According to HSBC’s “Future of Retirement” research, Millennials expect to retire at age 58, Generation X at 63 and Baby Boomers at 65. However, despite widespread expectations of an expansion in longevity, Millennials only expect to live to age 80, while Generation Xers expect to live to 87 and Baby Boomers to 86. If those expectations match reality, that would mean expected retirements of 22, 24 and 21 years respectively.

Those expectations notwithstanding, in terms of life expectancy and retirement planning, 65% of people – and 62% of Millennials themselves – believe the Millennial generation will live much longer and will need to support themselves for longer.

Savings ‘Accounts’

On average, Millennials started saving for retirement at age 26, though one in five have not yet started saving for retirement. On the other hand, that’s not too far off the patterns found in two elder cohorts: 19% of Gen X and 17% of Baby Boomers. Still, 80% of U.S. Millennials have already started saving for their retirement, with another three quarters (75%) citing plans to cut expenses to save more for retirement.

With 76% of Millennials concerned about running out of money affecting their retirement, 75% are prepared to cut back on their present expenses in order to save (higher than the global average of 65%), compared to 72% of Gen Xers and 57% of Baby Boomers. Seventy-three percent of Millennials see saving as a difficult but necessary task (compared to 70% of Gen Xers and 65% of Baby Boomers).

There is some difference across generations in terms of financial risk aversion. Forty-seven percent of Millennials (who arguably have a longer time horizon) say they are very willing to make risky investments to ensure their financial stability, well more than Gen Xers (27%) or Baby Boomers (13%).

Almost half of the U.S. Millennials surveyed are willing to take on more risk in their investments to generate wealth. The study also found that investment appetite across other generations is stark. Indeed, only 27% of Gen Xers and 13% of Baby Boomers are willing to take on the same risk profile. Moreover, they are “yearning to learn,” with nearly two-thirds (63%) of Millennials actively seeking information to guide their financial decisions, compared to Gen Xers (49%) and Baby Boomers (34%).

Sixty- three percent of Millennials actively seek information to guide their financial decisions, compared to 49% of Gen Xers and 34% of Baby Boomers.

View ‘Points’

Fifty-six percent of people believe that Millennials have experienced weaker economic growth than previous generations (compared to the global average of 53%), while 57% agree that Millennials are paying for the economic consequences of older generations, such as the global financial crisis and rising national debt.

However, 55% of people say that Millennials don’t know how good they have it, enjoying a better quality of life than any generation before them.

Only 9% of people think Millennials are in the best position for a comfortable retirement, compared to 38% who think Baby Boomers are.

HSBC’s “Future of Retirement” research, now in its 14th edition, surveyed more than 18,000 people across 16 countries to understand trends and key issues associated with retirement.

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