Why Yes, Millennials are Saving for Retirement
The Millennial generation—those born between1977 and 1996—is projected to equal or surpass the size of the Baby Boomer generation over the next 20 years. They currently comprise the largest segment of today’s workforce. So what is this age group doing about saving for retirement?
Although Millennials are often misrepresented as “live in the moment” folks who prioritize life experiences over long-term financial planning, you may be surprised to find out that they are also more engaged at an earlier age with retirement savings in the workplace.
According to the Pew Charitable Trust Retirement Savings Project, Millennials had higher balances in their defined contribution plans than their Gen X counterparts did at a similar age (based on U.S. Census Bureau data). In addition, Millennials between ages 25 and 31 are saving more into retirement accounts than those right out of school.
The Transamerica Center for Retirement Studies supported this with the following statistics:
- Seventy-one percent of Millennials are saving for retirement through employer-sponsored plans
- The median age to start saving was 24, which is younger than prior generations
- Those participating in a 401(k) or similar workplace plan are contributing a median of 10 percent of their annual salaries
- More than half of Millennials surveyed said they expect their primary source of retirement income to be self-funded through retirement accounts (such as IRAs and employer-sponsored plans) or other savings and investments
- The estimated median amount that Millennials have saved in all household retirement accounts is $23,000
Given that the Social Security Trust Fund Reserve may be depleted by 2034 and benefits reduced, these savers are not only being proactive, they’re being smart.
Another smart savings move for savvy Millennials: Self-directed IRAs
Motivated savers can build a more diverse retirement portfolio, given the diverse types of alternative assets these plans allow. By making their own investment decisions, Millennials and others can take advantage of market shifts they are following more nimbly, or choose to invest in assets they care about or that reflect their interests—from becoming an investor in a theatrical production to owning shares in a specialty farm business.
If you’re a younger investor looking to do more with your IRA, you probably have some questions about self-directed retirement plans. As a convenience, Next Generation offers complimentary educational sessions with easy scheduling. Alternatively, you can contact us via email at NewAccounts@NextGenerationTrust.com or call 888.857.8058.