Most Millennials Don’t Think They’ll Ever Be Millionaires, Survey Says
Posted By Ashley Eneriz on August 12, 2016 at 10:02 am
Saving for retirement is a daunting task. With the uncertainty of future social security benefits, having a well-funded 401(k) or some other plan is essential for all. However, millennials are feeling the weight of saving for retirement even more than other age groups. Wells Fargo and GfK surveyed 1,005 employed millennials. The majority (64%) of the millennials polled said that they don’t expect to be able to accumulate $1 million for retirement during their lifetime.
Why Millennials Don’t Think They Will Be Millionaires
Many millennials feel hopeless when it comes to their future retirement fund for a number of different reasons. The top reasons a majority of the millennials aren’t putting hope in becoming millionaires is because they do not have any retirement savings started.
Most millennials struggle finding extra money in their budget to save toward retirement. The survey found that most millennials who said they would not be able to reach $1 million in assets by retirement also made a median personal income of $27,900. Others blamed the gender wage gap as a reason why they don’t earn more and why they feel they will not reach their million-dollar retirement goal. The survey found that more millennial women lived paycheck-to-paycheck compared to the men surveyed. On average, the women who were polled also made more than $10,000 less per year than their male counterpart.
Of the millennials surveyed, many also reported that the burden of debt is also preventing them from saving. The survey revealed that 34% of millennials have an average of $19,978 of debt. And 75% of those with student loan debt described their debt load as unmanageable. The mix of a low-paid jobs and costly student loan payments make saving for retirement nearly impossible.
Still other millennials are still searching for their desired job in their desired career field, which is why many have not started saving. Only 36% of the millennials surveyed said that they are employed in the job they want in their desired field.
How much Are millennials saving for retirement?
When it comes to saving for retirement, 41% of millennials said that they have not started. On the plus side, 59% of millennials said they have started saving something for retirement. Financial advisers recommend saving for retirement as soon as possible, urging people to invest at least 10% of their income each year. But millennials who are saving for retirement are not saving that much. Forty-four percent are saving 1% to 5% of their income, 33% are saving 6% to 10% of their income and only 6% are saving 11% to 14%.
Not all millennials in the survey were feeling burdened financially. In fact, one-third of millennials expected to become millionaires in their lifetime. This group of millennials were found to have higher salaries than the other millennials, with a median income of $53,000. Not only is this group of millennials earning more, they also are investing more. One-fourth of the members of this millennial group said that they are saving more than 10% of their income.
How millennials can become millionaires
Finding extra money in the budget for retirement is hard, especially with hefty student loan debts and menial paychecks plaguing millennials. However now is the best time for millennials to contribute to their retirement account because they still have time on their side. Financial experts say it is better to invest even just a little now then to wait for a better time.
How? Millennials should start by enrolling in their company’s 401(k) plan, even if they are not at their dream company. Having retirement savings taken out right away will make it less painful to find room in the budget. Plus, contributors get a tax break. Some employers even match up to 3% of their employees’ contributions, so employees that save 3% each year in retirement are actually saving 6%. For an individual making $30,000 a year, that is an extra $900 bonus going straight to the retirement account.
If an employer does not offer a 401(k) plan, then millennials should take saving matters into their own hands, while also looking for a better company to work for. Start by saving 1% to 2% of each paycheck in a retirement account and slowly increase savings until 10% or more is invested each year.
Another financial tip: Millennials who have federal loans should research income-based repayment programs and loan forgiveness programs to help ease the debt burden. Individuals with private loans should look into refinancing to lower their monthly loan payment, which in turn frees up more money for retirement savings.