What are the top money concerns of Millennials?
According to Gallup’s most recent Economy and Personal Finance poll, the number one financial concern of young adults age 18 to 29 is paying college expenses and repaying college loans. The remaining top 5 concerns are lack of money/low wages, housing, paying off bills/credit cards/debt, and lack of employment.
Where do retirement savings rank on the list for this age group? All the way at number 9! Retirement savings does not even make the top 5 until the 50 to 64 year-old age group. Even then, it is still listed as the number 5 concern.
Why focus on retirement as a Millennial?
As a Millennial with many immediate wants and needs competing for your dollars, you may be wondering why retirement savings at this age could be so important. The answer is simple: compound interest.
Consider this scenario: three Millennials, all the same age, have not yet begun saving for retirement. As they progress through life, they begin contributing to a retirement plan at age 25, 35, and 45, respectively. Let’s say that they each are able to save $500/month until they retire in a portfolio averaging a return of 7%/year and that they each want to retire at age 65:
The chart says it all: saving earlier for retirement gives a clear and definite advantage over delaying. If the people who began saving at 35 and 45 wanted to have the same amount banked for retirement at 65 as the Millennial who began saving at 25, they would have needed to save about $1,070/month and $2,500/month, respectively. What a difference!