Will Millennials Have Enough Money to Retire with Confidence?

Published on August 28, 2018

Save, save, save—early, often, and enough for your future retirement.

It’s sound advice but are younger workers following it?

Saving for retirement is a challenge for many younger workers, who are faced with student debt and are trying to establish themselves while still being able to cover all their other bills. Plus, today’s workforce is less likely to have a pension and many people are freelancers who lack reliable, steady income. The full retirement age creeps up quickly over time, Social Security’s future is unclear, healthcare costs continually increase, and Americans are living longer.

It’s no wonder people are concerned about having enough money to retire with financial security.

Millennial Pessimists

According to the 2018 Retirement Preparedness Survey* from PGIM (Prudential Financial Inc.’s asset management division), millennials are pretty pessimistic about their ability to retire comfortably, and about the future of employment opportunities.

• Nearly 66% said full-time employment will largely be gone, with freelancers comprising the majority (at least 75%) of the future US workforce.
• Although current retirees based their decision on age and eligibility for Social Security benefits or pensions, many pre-retirees will base their decision more on how much wealth they’ve accumulated (about half of the Gen Xers, and 62% of millennials).
• Adding to the retirement determination is debt; of millennials, 33% said a prerequisite to retirement is paying off debt and becoming eligible for Social Security.
• Only 51% of millennials expect to receive Social Security benefits upon retirement (compared to 86% of current retirees who collect Social Security income).
• Of those surveyed, nearly a third (31%) were not saving for retirement at all “because anything can happen between now and then.”

Of all pre-retirees, 25% weren’t sure how much they needed to save for retirement.

Not surprisingly, Gen X respondents were more concerned about retirement than millennials, since retirement is in the foreseeable future for those in the older end of that group (now in their mid-50s). They also quoted a much higher figure than millennials did for what they would need on average to retire: $2.5 million vs. $1.1 million. So not only are the younger workers pessimistic, they are probably not being realistic, either! More than of half of the pre-retirees said they expected to continue working to some extent during their “retirement.”

One interesting note from the current retirees: just over half of them reported they are living their “dream retirement.” This group started saving for retirement by age 40, saved more, and in general was more informed about investing than those experiencing a less dreamy retirement (who started saving, on average, at age 46).

Build your retirement confidence—and savings—through self-direction

Rather than fret about your future, you can take control of it by investing in alternative assets through a self-directed retirement plan. Fortunately, you can open and fund these plans without breaking the bank. With a self-directed IRA plan, you get the same tax advantages of regular retirement plans but you can include a diverse array of nontraditional investments such as real estate, commodities, precious metals, equity funding, and many others.

If you’re already confident in your knowledge about alternative assets, you can start building a more diverse portfolio that can lead you to a more confident retirement, using a self-directed retirement plan. Read more in our whitepaper library, download a starter kit, or contact Next Generation for assistance and answers to your questions: Call 1.888.857.8058 or email NewAccounts@NextGenerationTrust.com.

*Study of 1,514 adults, conducted online by Harris Poll between Jan. 18 and Feb. 1, 2018 commissioned by PGIM Investments, the investment manufacturing and distribution arm of PGIM, the global asset management business of Prudential Financial.