Millennials Are Still Behind Schedule on Retirement Planning

By: Anneken Tappe · June 04, 2024 · Reading Time: 3 minutes

Millennials have been blamed for a lot of things on their way into adulthood. Remember how they couldn’t save up for down payments because of avocado toast? Now the economic realities of the tricky decades this generation graduated into are catching up on them, with a recent survey finding that millennials are behind schedule when it comes to retirement savings.

Why Are Millennials Behind?

The average millennial wants more than $1.6 million to retire comfortably, but has saved less than $63,000 so far, according to a survey by Northwestern Mutual. There are two main things making it harder for millennials to prepare for retirement: student loans and homeownership.

The cost of college has skyrocketed in the decades since millennials were born. When baby boomers were in their 30s, only 13% carried student loan debt, per data from the Survey of Consumer Finance, but nearly half (47%) of millennials in their 30s do. This is putting additional strain on millennials to meet their financial goals, including saving for retirement, but also saving up to buy a home.

Buying a home in America has been complicated by a massive housing shortage and affordability crisis that has just gotten worse throughout the pandemic. In other words, the costs to buy a home are high, but even so, millennial homeownership rates are rising. With many buying homes later in life, or remaining priced out of the housing market altogether, millennials on a whole are spending more time renting and less time building home equity, which affects their ability to save now and reap the benefits later in life.

Planning Ahead

But it’s not all doom and gloom for younger Americans. In recent years, adults ages 18 to 39 saw their wealth increase by as much as 80%, much more than other generations, driven by millennials’ growing interest in investing since the pandemic, which coincided with a strong market. Plus, there’s a multi-trillion dollar generational wealth transfer on the horizon, some millennials may be poised to receive an inheritance to buoy their retirement savings.

Millennials may be running behind schedule on their retirement savings, but with smart spending and savvy investments, there’s plenty of time to catch up.

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