Millennials Forced To Start Saving For Retirement Years Earlier Than Parents

Despite being burdened by nigh-unprecedented levels of debt (housing, education, cars and even credit-cards), millions of millennials have started saving for retirement years earlier than their baby-boomer parents – nine years earlier, on average, according to data cited by Bloomberg.

This fact was recently highlighted by data gathered via Charles Schwab’s “Retirement Reimagined” campaign, which suggests that the lack of pension plans and other retirement incentives offered to young people today is forcing them to take matters into their own hands.

As a result, millennials are saving for retirement years earlier than their parents and grandparents. But unfortunately this likely won’t be enough to close the wealth gap.

Millennials are also less likely to own homes, which is critical for creating wealth.

Source: Bloomberg

We noted earlier that presently, renters (including many millennials) are saying that they feel that their odds of ever owning a home are shrinking fast.

Because of this, millennials are heading toward a fundamentally different style of retirement than earlier generations.

“Millennial retirees will spend 24% less time on financial matters than boomers, using their savings to pursue their desired lifestyle and passions,” according to the report, which surveyed 5,000 Americans and used predictive analytics to anticipate retirement outcomes and attitudes by generation.

To be sure, this street runs both ways: younger workers are likely to start saving earlier for retirement than boomers simply by virtue of being auto-enrolled into their company’s 401(k) plan rather than having to opt into such plans, like boomers had to.

What’s more, workplace retirement plans are also adding auto-escalation clauses, where participants’ contribution as a percentage of their pre-tax paycheck is automatically bumped up 1% a year.

So, while millennials mostly won’t enjoy the pensions that were lavishly doled out to their forebears, at least they’re getting a head start.