Study Shows 40% of Millennials Do Not Prioritize Saving for their Retirement!
Most millennials today are enjoying their lives by eating out at fancy restaurants, buying their favorite expensive high-end gadgets or traveling the world. While there’s nothing wrong with these activities, the financial experts warn most millennials are too wrapped up in YOLO (you only live once) fever, thinking that they fail to prepare for their future.
Investing for their retirement seems like a far-fetched idea to them. The financial experts reveal the alarming rate of millennials not preparing for their future. And here’s how you can break the norm and prepare for your financial freedom.
According to a study conducted by Navient’s Money, nearly four out of every 10 millennials didn’t prioritize saving for their retirement. These millennials aging below 35 years old believe retirement can wait for 10 or 20 more years.
Of all the items stated above, their vacation or travel goals could be considered as luxurious according to the financial experts. The financial experts reiterate though that millennials who invest in their nearer-term goals are on the right track in deploying their money to prepare for their future. Aside from that, the study shows around 31% of adults aging from 22-35 years old don’t have anything saved for their retirement according to the study.
The retirement accounts’ average balance decreased from $37,638 from the year 2016 to $32,818 in 2017. The millennials who graduated with a bachelor’s degree have the highest rate of retirement savings (around 45%) compared to 25% with no degrees at all. Only 31% of millennials with associate degrees have retirement savings as well as 38% for those holding masters or other advanced degrees. Aside from these factors, the study also reveals the culprit as to why most millennials barely have money to save for their retirement: the student loan debt.
The Rise of Student Loan Debts
According to the study, most graduates who didn’t have college loans are saving for their retirement with higher balances (around $47,297). Meanwhile, those graduates with student loan debts only save an average of $25,301 for their retirement accounts.
According to Navient’s Head of Research Julie Wilson, most millennials already struggling with paying their debts, budgeting and saving their money even before they found work. Wilson shared their findings as they conducted the study on more than 3,000 working millennials.
Whether the millennials plan on fulfilling their nearer-term goals like paying off debts, mortgages, and traveling, the millennials can also save for their retirement before getting their salary by automating their deductions. According to the financial experts, their respective employers can enroll their employees on 401(k) match program.
In this way, the millennials can save not only by automating their savings on their retirement accounts but they also save as much as twice their employer’s pay thanks to the matching program.
According to the study, those millennial workers whose employers offer a matching 401(k) plan tend to save an average of $32,851 for their retirement compared to 75% of millennials who don’t have matching plans. They only save an average of $18,879 for their retirement.
Start Saving Now
You may not realize the importance of saving early now, but most financial experts recommend you start saving early while you’re still young. It may not create a significant, obvious impact right now but your money will grow exponentially in the next couple of years thanks to the power of compounding interest.
The earlier you start saving, the more your money will have room for growth. The financial experts advise you delay your gratification, for now, to reap a bountiful life in the future.
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