By Chris Hogan GOBankingRates.com
WWR Article Summary (tl;dr) Author Chris Hogan suggests the negative press surrounding the financial status of millennials is misleading. In this article, he breaks down why he believes the false narrative exists and what millennials can do to best position themselves for retirement.
If you follow the news, you've probably heard plenty of gloom-and-doom stories about young people and their prospects for retirement. You've likely heard they're not preparing for retirement, they're living for the moment and their economic future is bleak. It's a depressing picture. And it's misleading.
The retirement picture is looking great for one particular group of people: millennials. And there are stats to prove it.
WHAT'S THIS NEW RESEARCH? Ramsey Solutions, a financial advisory, recently hired a third-party research team to survey 1,000 American adults about retirement. Because the research cut across age, gender and location, the findings of the Millennials and Retirement report provide an accurate picture of the status of retirement planning in every generation, including millennials, or those born 1980 to 1997.
Here are a few findings from the study:
-Fifty-eight percent of millennials are actively saving for retirement, which is similar to baby boomers (55 percent) but less than Generation Xers (65 percent).
-Thirty-eight percent of millennials know how much money they'll need to retire, which is a higher percentage than baby boomers, (37 percent) and Generation Xers (36 percent).
-While baby boomers are the most likely to know their retirement age, some are already there, 40 percent of millennials and Gen Xers know how old they'll be when they punch the clock for the last time.
OFF TO A GREAT START The research showed that nearly 60 percent of millennials have less than $10,000 saved for retirement. Now that might seem like bad news, but it's not. Roughly half of baby boomers have tucked away similar amounts, even though they have had more time to save for retirement. Millennials are just now finishing college and settling into their careers, but they're already preparing for the future.
If they stay on track, they'll out-save other generations. And they'd like to save even more.
THE HURDLES TO SAVING FOR RETIREMENT The study also showed that seven in 10 millennials wish they were saving more right now, and eight out of 10 plan to save more in the future. The problem? This young generation feels stuck. Caring for their families, daily life and debt is draining their retirement dreams.
But here's where millennials are ahead of the game: Time is on their side. Without debt, at an average of over $30,000 for young adults, millennials could put away the recommended 15 percent of their income and retire with a secure financial future. Maybe they'll even become a generation of millionaires.
THE SOLUTION FOR MILLENNIALS, AND THE REST OF US So what's the solution for these young adults, and the rest of us? Getting rid of debt and getting on a monthly budget. That means making major changes in their spending behavior. If they can do that, they'll change the future of retirement and leave their children with a great legacy to pass on.