Younger generations in the US may not yet understand how much retirement expectations are changing with the economy, according to recent surveys.
Economic Turbulence
Image Credit: Shutterstock / fizkes
Millennials, who are between 28 and 44 years old, have faced a lot of financial strife as a generation, including recessions, housing crises, and a pandemic that temporarily shut the whole world down.
Still Optimistic About the Future
Image Credit: Shutterstock / fizkes
Despite experiencing tougher economic circumstances than the generations before them, plenty of Millennials remain optimistic about their financial future, particularly where retirement is concerned.
Two Enlightening Polls
Image Credit: Shutterstock / tsyhun
Two recent polls suggest that many Millennials expect to retire before they turn 60, despite the average retirement age for Americans being 63, according to the Center for Retirement Research (CRR) at Boston College.
Retiring Before 60?
Image Credit: Shutterstock / Studio Romantic
The first is a February poll by market research and data analytics firm YouGov, which showed that the largest share of Millennials surveyed believed they would retire between the ages of 51 to 60.
Further Evidence
Image Credit: Shutterstock / Pickadook
The global financial investment management company Principal Financial also conducted a survey of its own, which showed that the average Millennial expected to retire at age 59 or younger.
Younger Workers Optimistic
Image Credit: Shutterstock / Sirikan Aka
What’s more, the YouGov survey shone a light on a fascinating phenomenon amongst a small percentage of younger US workers.
Even Higher Expectations
Image Credit: Shutterstock / SomYuZu
3% of both Millennials and Gen Z reportedly told surveyors that they expected to retire by the time they turned 40, showing an unbeatable optimism about the economy from a small share of young people.
Difference Between Gen Z and millennials
Image Credit: Shutterstock / SFIO CRACHO
Speaking of Gen Z, who fall between the ages of 12 and 27, it appears that the younger generation seems to have a more realistic grasp on retirement ages according to YouGov.
Lower Expectations
Andrii Yalanskyi
The largest share of Gen Zers (33%) expect to retire between 61 and 70 years old. However, in the Principal Financial survey, the average Gen Zer expects to retire by 55 years old.
Does It Line Up With Reality?
Image Credit: Shutterstock / GaudiLab
As we can see, expected retirement for younger generations skews in different, but fairly positive directions. But are these expectations reflected in the current economy?
Out of Reach for More Americans
Image Credit: Shutterstock / Ruslan Huzau
Despite the optimistic response, this ideal retirement age is becoming increasingly out of reach for many Americans – and not just for Millennials and Gen Zers, but even for Gen X workers who are on the brink of the traditional retirement age.
AARP Survey
Image Credit: Shutterstock / fizkes
A survey by the American Association of Retired Persons shared that approximately 1 in 4 working Americans over the age of 50 believe they will never retire. A similar amount had no savings put aside for retirement.
Retirement Goals Pushed Back
Image Credit: Shutterstock / Dusan Petkovic
If this trend continues among Millennials, it could push their retirement goals far further back than they aim for.
Potentially Unrealistic Ideas
Image Credit: Shutterstock / Salivanchuk Semen
Sam Nofzinger, the general brokerage manager of the New York investment platform Public, spoke about the survey results, claiming that younger Americans may have an unrealistic idea of what retirement actually looks like.
Difference Between Wanting and Getting
Image Credit: Shutterstock / Juice Flair
“There’s a huge difference between wanting to retire at 55 and actually retiring at 55,” Nofzinger said.
Millions to Retire
Image Credit: Shutterstock / mojo cp
37% of Millennials surveyed also believe that they will need between $500,000 to $1 million in savings in order to retire with a comfortable nest egg.
Even more Savings Needed
Image Credit: Shutterstock / iHumnoi
This is also supported by a recent report by financial services organization Northwest Mutual, which found that many Millennials believe that they will need $1.65 million for a secure retirement.
What They Need and What They’ve Got
Image Credit: Shutterstock / Kmpzzz
What’s concerning is that the average Millennial only has retirement savings of $62,600, leaving a chasm of more than $1.5m between how much they have and how much they think they need. It doesn’t help that the earlier a person expects to retire, the more savings they’ll need to support themselves.
Some Believe They Will Never Retire
Image Credit: Shutterstock / Perfect Wave
Some participants certainly fall on the more pessimistic side of estimates. According to YouGov, 13% of Gen Z and 15% of Millennials believe they may never retire. And with the average retirement age consistently on the rise, they could be onto something.
Raising the Retirement Age?
Image Credit: Shutterstock / Salivanchuk Semen
Last year Congress began exploring the idea of raising the retirement age, and the accompanying social security that retirees are entitled to, from 65 to 70-71, in line with the rising average life expectancy.
The post – Why Millennials Might Rethink Their Early Retirement Plans – first appeared on Mechanic Insider
Featured Image Credit: Shutterstock / CrizzyStudio.
The content of this article is for informational purposes only and does not constitute or replace professional financial advice.
