Despite millennials making up the largest portion of the workforce, it seems that most of them are not saving for retirement. According to a report by the National Institute on Retirement Security, “roughly two-thirds of millennials have nothing saved so far.”
Currently, the average retirement age is 62 years old—which is a whole decade younger than the expected millennial average retirement age, 72 years old. I believe an increase of student loan debt could explain this trend.
Compared to older generations, millennials are living in a different financial environment that makes it harder to start saving. Financial website The College Investor found that the Class of 2016 millennials enter the workforce with an average of $37,172 in student loan debt—compared to just $14,700 average student loan debt for Generation X.
However, the weight of student loan debt has not only kept millennials from saving for retirement, but also big-ticket purchases like cars or houses—which could slow the economy. The New York Fed President said that “continued increase in college costs and debt burdens could inhibit higher education’s ability to serve as an important engine of upward mobility.”
With simple budgeting tricks, there seems to still be hope for millennials’ retirement funds. CNBC reports, “Even if you’re like most millennials and have student loan debt, that doesn’t automatically preclude you from retiring early."
Starting simple like tracking your spending and opting for cheaper housing will go a long way. At such a young age, saving for retirement may not seem like a priority. At the same time, we all want to be able to afford a relaxing retirement. The earlier millennials start saving, the better!