A new survey claims that Millennials are, in some ways, better off than older generations in preparing for — or at least thinking about — retirement. But let’s not break out the champagne just yet.
Ramsey Solutions commissioned a 2016 survey of more than 1,000 U.S. adults to evaluate the state of retirement in America, and found that 38% of Millennials claim they already know how much money they’ll need to retire — essentially the same as Baby Boomers (37%) and Gen Xers (36%).
More than three-quarters say they are either “somewhat confident” or “very confident” they’ll have enough money for retirement. Only 64% of respondents overall feel the same way.
And while Baby Boomers, many of whom are already retired, are more likely to be able to pinpoint their retirement age, Millennials and Gen Xers are on the same page, with 4 in 10 saying they know how old they’ll be when they retire — though again, those expectations have turned out to be unrealistic for many current retirees, and who’s to say things will play out differently for the Millennials?
Good Intentions
There are 58% of Millennials who are actively saving for retirement, and they began saving at an average age of 23. Another third say they’ll begin saving for retirement, albeit at an average age of 33. They do, however, have good intentions about saving; 7 in 10 say they wish they were already investing more, while nearly 8 in 10 say they plan to save more in the future. Of the Millennials who are actively saving, 39% set aside up to 9% of their income for retirement — $5,000 of the average annual Millennial household income of $55,200.
According to Millennials, the cost of living and the cost of meeting their children’s financial needs are their biggest obstacles to saving more for retirement. Student loans, credit card debt and mortgage debt round out the top five. The survey found that the average Millennial debt load is $30,580.
While nearly two-thirds of all those surveyed expect Social Security to be their top source of retirement income (64%), Millennials rank Social Security a distant third (44%), choosing instead to rely on:
- 58% - their own savings through a 401(k)
- 54% - personal savings/cash
Despite the well-chronicled demise of traditional pensions (certainly in the private sector), nearly one in five (18%) expect a pension to provide any portion of their retirement income, and just one in five are “very confident” that Social Security will be available when they retire. While more than half of Baby Boomers expect Social Security to make up all or most of their retirement income, only 28% of Millennials hold the same belief. That said, Boomers have been similarly inclined to “over anticipate” pension benefits — and, at similar points in their careers — to give Social Security’s resilience short shrift as well.
