Millennials are Redefining Retirement
According to a recent survey by the retirement finance company, IRALogix Inc., Millennials are changing the way people think about retirement. According to over 50% of Millennials surveyed, obtaining "financial independence" is a more significant indicator of retirement than simply turning 65.
While some Millennials hope to retire at age 65, many see retirement as a stage of greater freedom in their lives rather than a total absence from the workforce.
Based on a study conducted in February targeting millennials of various household incomes between the ages of 28 and 43, when it comes to retirement plans, 22% of Millennials want to work longer because they "enjoy" their jobs or don't have enough money saved for retirement, while 47% want to retire as soon as they can afford it. The results show Millennials have a moderate level of confidence, about 47%, in their ability to save enough money for retirement. However, 29% say they are not confident in their ability to save enough money. More than half of Millennials hold themselves accountable for making sure they have enough money saved for retirement; however, 25% place this on their employers, and 20% think the government should pay for their retirement.
Nearly a quarter of those who think their employers should be responsible for retirement savings want a standard defined benefit plan, in which the company assumes all financial risk and agrees to pay a specified monthly amount upon retirement, with investments handled by experts.
Another recent study done by the personal finance company, Credit Karma, also addresses "money dysmorphia," a term describing what happens when people, regardless of the circumstances, feel insecure about their financial condition; it’s been used to describe the distorted financial perception commonly seen among Gen Z and Millennials. Credit Karma reports 43% of Millennials and Gen Z encounter this issue. 59% of respondents said they felt financially stable, despite the fact many admitted to feeling behind. This shows how people's perceptions of their financial stability are often different from their actual circumstances.
Money dysmorphia has a detrimental effect on financial decisions; 40% of those who experience it have difficulty saving money or avoiding overspending and debt buildup.
In contrast to these financial challenges, Millennials manage their debt well. Most have reasonable debt levels; of those with debt, 55% have debts ranging from $0 to $20,000 (not including mortgages).
When it comes to financial priorities, 62% of Millennials try to strike a balance between long-term goals like retirement savings and short-term ones like buying a house. Additionally, 61% of workers consistently make contributions to employer-sponsored retirement plans, like SEP IRAs, SIMPLE IRAs, 403(b)s, and 401(k)s.
We know navigating the evolving retirement landscape can be daunting, which is why we're committed to partnering with you every step of the way. Don't hesitate to reach out to our Trusted Advisors today — we're here to help you optimize your retirement plan, improve participant outcomes, and give you the peace of mind that comes with knowing your plan is in capable hands.
Sources:
(2024, January 17). Gen Z and millennials are obsessed with the idea of being rich, and it could be leading to money dysmorphia. Credit Karma. https://www.creditkarma.com/about/commentary/gen-z-and-millennials-are-obsessed-with-the-idea-of-being-rich-and-it-could-be-leading-to-money-dysmorphia
(2024, March 12). Survey Reveals New Era of Financial Independence as Millennials Seek to Redefine Retirement. IRA LOGIX. https://iralogix.com/survey-reveals-new-era-of-financial-independence-as-millennials-seek-to-redefine-retirement/