Here’s a fun piece of trivia: Millennials will need about $2 million to retire comfortably. Unless you enjoy making fun of the youngest generation, that number is less is terrifying.
People love to hate Millennials, or the generation born between 1982 and 1994. Even the word “Millennials” has been overused so much that the word itself can prompt Olympic-level eye rolling. But new data from USA Today should inspire sympathy for the Me Generation.
No, it’s not the $1 trillion college debt load they face. USA Today recently reported that young people born in the late 1980s will have to have savings of at least $1.8 million to maintain quality of life during retirement. For those born in the 1990s, that number jumps to more than $2.5 million.
Even worse, because pension plans are a thing of the past and Social Security benefits expected to drop, young people will have far fewer supports for retirement.
The oldest Millennials, assuming they have no money set aside today and that they earn 5% on their investments, will need to sock away $2,000 a month for 32 years to accumulate a $1.8 million nest egg. And the youngest Millennials would need to save $1,000 a month for 48 years to accumulate $2.4 million.
According to USA Today:
“The oldest Millennials, assuming they have no money set aside today and that they earn 5% on their investments, will need to sock away $2,000 a month for 32 years to accumulate a $1.8 million nest egg. And the youngest Millennials would need to save $1,000 a month for 48 years to accumulate $2.4 million.”
In a time of slow economic growth and lingering economic anxiety from the Great Recession, many young people no longer expect to enjoy the same quality of life as their parents’ generation. That’s one reason Millennials are so much more likely to move to urban areas. They aren’t inscrutable bohemians — they simply go where the jobs go.
Fully two out of three young people aged 18 to 29 have relocated in the last five years. Not only that, but young people with college loans are far more likely to rent their housing, and the rate of young people buying homes is at an all time low. In the long run, that makes it harder to save money for retirement, too.
Perhaps the situation isn’t as bad as it sounds. After all, that $1.8 million figure isn’t much higher than the amount elder generations needed to retire. USA Today pegged Gen X and Baby Boomers’ retirement benchmarks at $1.6 and $1.3 million, respectively.