According to a recent study from the Transamerica Center for Retirement Studies, the median retirement savings for millennials is $31,000.1 While that may be a good start, it’s well short of what many millennials will need to fund a long and enjoyable retirement.
Millennials will face a number of challenges that previous generations didn’t face. The first is longevity. Life expectancy continues to increase. The medical industry is rapidly developing new treatments, services and technologies. It’s possible that millennials will live longer than any previous generation. If so, that means they’ll have to fund more years of retirement, which means they’ll need more savings.
There’s also the fact that millennials have to shoulder much of the burden for funding their retirement. Previous generations could rely on employer pensions, but that’s a benefit that has largely disappeared. Social Security benefits could also be reduced in the future if the program’s funding issues aren’t resolved. Personal savings could likely be the primary income source for many millennials in retirement.
A recent analysis of the Federal Reserve’s 2013 Survey of Consumer Finances found that the average working-age American couple has only $5,000 saved for retirement. An overwhelming majority of couples—70 percent—have less than $50,000 saved.1
As you might imagine, that amount is probably far less than those couples need to fund their desired lifestyle in retirement. As a new graduate, you likely don’t want to end up in the same position.
Unfortunately, many young workers haven’t taken the steps needed to avoid a similarly underfunded fate. A study from the Federal Reserve found that 40 percent of those ages 18 to 29 have given no thought to retirement, and 50 percent have no retirement savings or pension.2