A new survey indicates that millennials have an unrealistic expectation for the age at which they will be able to retire, and this could spell bad news for their savings habits.
According to a recent poll of 1,500 millennials aged 21-37 years by TD Ameritrade, the average age at which millennials expect to retire is 56, approximately seven years younger than the current average retirement age of 63.
While it’s okay to dream of an early retirement, it’s also important that millennials face the reality that preparing for retirement takes a lot of planning, effort, and saving — something this generation has yet to accomplish. An April poll by NBC News indicated that 77 percent of millennials aged 18-34 reported possessing one or more forms of debt, while 30 percent of all millennials reported having less than $1,000 in a personal savings. Twenty-four percent reported having no money saved at all.
[Related: Millennials: All debt, no savings]
Another factor that will likely derail millennials’ dreams of an early retirement is the growing student loan crisis. With current student debt at approximately $1.5 trillion dollars, the fact that many millennials can’t even tell you the interest rate they are paying on their student loans shows that this generation has become apathetic to accepting massive amounts of debt, often times for a degree they will not use in the labor force.
Finally, millennials face a large degree of uncertainty when it comes to the possibility of being able to collect Social Security. While today’s eligible retirees enjoy monthly Social Security checks from the federal government, last week, trustees for the Social Security fund predicted that at current rates, the fund will run out of money in 2034, unless policies are changed.
Many young individuals have embraced the gig economy in place of the regular 9 to 5 job, a phenomenon which has enabled them to work fewer hours and provided greater flexibility. While this may prove for a more comfortable lifestyle, the option of deciding when or if one wants to work could lead to working the least amount of hours necessary to maintain a lifestyle, without a concern for putting away extra money in retirement savings. A recent poll indicated that more than one in four workers in the gig economy have nothing saved for retirement.
If millennials are serious about retiring early, they should be doing everything possible to build themselves a financial safety net that they will be able to rely on when they decide to leave the labor force. Regardless of whether one has a typical 9-to-5 job, works as an Uber driver, or spends their time renting out an apartment on AirBnB, millennials need to understand that preparing for retirement takes time, effort, and lots of saving.
