Millennials: On Your Mark, Get Set, Start Saving for Retirement!
Published on January 12, 2016
The millennial generation (Gen Y) is the group comprising people ages 18 to early 30s (more or less), right behind Gen X. According to a report issued by the White House’s Council of Economic Advisors, they are a lot of things: the largest generation, comprising one-third of the US population now; the most diverse and most educated; and very tech savvy. This generation is busy studying or starting careers and getting involved in their communities and social causes.
But how involved in their retirement plans are they being? And can they overcome the two financial downturns that came in the wake of 9/11 and of course, the Great Recession? After all, members of this group are starting their careers in a market still shaken by those financial crises and will likely be dealing with the after-effects for many years.
As the report notes, “Millennials are currently about a third of the labor force and … they have faced substantial challenges in entering the workforce during the most pronounced downturn since the Great Recession.” The Great Recession had a negative impact on many Americans’ ability to save and invest, including the millennial crowd. Many are living with parents to save money.
It’s time for this generation to get a foothold at the savings starting line and put their retirement goals in front of them. And, as a large portion of today’s workforce, they will be shaping the economy in decades to come.
Millennials lag behind in the retirement savings race
The bad news:
An Indexed Annuity Leadership Council (IALC) retirement data survey revealed that 37 percent of millennials have no money saved for retirement and that nearly a quarter of this group owes more money than they have. For some of them, they are probably not putting retirement on their savings radar since it is so far away and therefore, not a priority. Others are facing student debt or have other life expenses to consider (paying high rent or saving for a new home, for instance).
The good news:
This population has plenty of catchup time ahead of them to build up retirement savings. And you’re never too young to start saving (even college students can start).
The better news:
Opening a self-directed retirement plan, and investing in alternative assets, can be a great way to close that retirement savings gap.
Those tech savvy millennials have lots of resources at their disposal to research all about nontraditional investments, and to find out more about self-direction as a retirement strategy. For those who are comfortable making their own investment decisions, and already know and understand certain alternative asset classes (or have a trusted advisor to turn to), self-direction can give their retirement accounts some much-needed forward momentum.
It doesn’t take much money to open a self-directed retirement plan and with steady, disciplined contributions, that last-place status can move up to a great finish when it’s time to retire. (Slow and steady wins the race, right?)
The professionals at Next Generation Trust Services are here to help millennials, Gen Xers and baby boomers who want to self-direct their retirement plans, with helpful information and guidance; and all the forms you need to open and account or make most transactions are right on our website.