Millennial Retirement Confidence Hits Low!

What we have for you today!

Four Steps to Help You Hit Your Magic Number for Retirement
Kevin Dwyer, Kiplinger

The rising cost of living has led Americans to believe they need $1.46 million to retire comfortably, according to Northwestern Mutual's 2024 Planning & Progress Study. This figure has increased significantly from $1.27 million just a year ago and reflects a 50% rise since 2020. Inflation plays a substantial role in this shift, as many people, especially younger generations, anticipate living longer lives due to advancements in healthcare and technology. Additionally, millennials and Gen Zers aim to retire earlier than previous generations, even as early as 60, making it crucial for them to save more consistently and earlier in their careers.

Concerns about the future of Social Security add to the urgency, as potential shortfalls may lead to delayed benefits or reduced payouts. However, there are positive signs: younger generations are starting to save for retirement earlier, with Gen Z beginning as young as 22. This early start, combined with the power of compounding interest, significantly boosts their retirement savings over time. Determining the right amount to save, or the "magic number," requires careful planning, considering factors like retirement location, longevity, annual expenses, and withdrawal strategies. Consulting with a financial adviser is recommended to navigate the complexities of retirement planning and ensure a secure and personalized retirement plan.

OPINION
So, apparently, the magic number for a comfy retirement is now $1.46 million. No big deal, right? Just a casual 50% increase since 2020. Inflation’s doing its thing, and it looks like our dreams of retiring early might require some serious saving. I mean, who wouldn’t want to save like they’re preparing for a 40-year vacation? And hey, we’re already starting young, so maybe all those memes about millennials not being able to afford houses will be replaced by memes about us living until 100 and needing a bigger retirement fund.

But let’s be real—figuring out how much to save and when to retire feels like trying to solve a puzzle with pieces that keep changing. Do I really need a longevity calculator to tell me I might live to 94? And the idea of strategizing how to withdraw retirement funds without selling low in a bad market? Yeah, I’ll definitely be calling in a financial adviser for that one. In the end, it’s all about planning smart, staying optimistic, and maybe just crossing our fingers that Social Security is still around when we finally decide to hang up our hats.

Emerging Trends in Savings Behavior Across Generations: Gen Z, Millennials, and Boomers
Kompasiana adalah platform blog

The article highlights significant differences in savings patterns between younger generations (Gen Z and millennials) and Baby Boomers. Gen Z and millennials are depleting their savings at an alarming rate, driven by factors such as rising living costs, student debt, and the high cost of urban housing. The economic fallout from the COVID-19 pandemic has further strained their financial stability, with many relying on savings to cover basic expenses amidst job losses and inflation.

In contrast, Baby Boomers have been increasing their savings, benefiting from accumulated assets and fewer financial obligations. Their more conservative spending habits, especially in response to economic uncertainties, have contributed to this trend. The article notes that these divergent behaviors could have broader economic implications: younger generations' reduced spending may hinder economic growth, while Boomers' increased savings, if not reinvested, could contribute to economic stagnation. The article underscores the need for balanced financial strategies and policies that promote both saving and spending across all age groups to sustain economic momentum.

OPINION
So, apparently, while we’re out here pinching pennies and trying to survive skyrocketing rent, student loans, and avocado toast budgets, Boomers are stacking their savings like it’s a competition. The article pretty much says that while we’re depleting our savings just to stay afloat, Boomers are sitting on their comfy retirement nests, watching their accounts grow. I mean, sure, we could try being more "conservative" with our spending, but it's a little hard when the cost of living feels like a constant uphill battle.

And now we’re supposed to worry that our dwindling savings might slow down the economy? Meanwhile, the Boomers' savings, if not spent, could also lead to economic stagnation. Talk about a double-edged sword! Maybe if we could just get a little break on those rent prices or student loans, we wouldn’t have to choose between saving for the future and, you know, surviving the present. But hey, no pressure or anything, right?

Millennials Are Becoming Boomers
Ben Carlson, A Wealth of Common Sense

The article by Ben Carlson explores the surprising parallels between millennials and baby boomers, despite earlier predictions that millennials would deviate from traditional paths like homeownership and wealth accumulation. Initially labeled as the generation that would never buy homes or leave big cities, millennials have defied these stereotypes. Redfin data shows that millennials are now largely on track with previous generations in terms of homeownership, though they started later due to longer education periods and delayed marriages.

The article highlights the significant wealth gains millennials have made, particularly in real estate, which now constitutes a large portion of their financial assets. Millennials' household net worth has increased drastically since the pandemic, surpassing that of baby boomers at the same age. Although housing prices may not continue to boost wealth as they did in the 2020s, millennials are well-positioned to become the wealthiest generation, aided by higher education levels and future inheritances from baby boomers. The article concludes by reflecting on the cyclical nature of generational dynamics, noting that just as millennials blame boomers for various issues, future generations may one day critique millennials in a similar way.

OPINION
So, it turns out we millennials are becoming the very thing we swore we’d never be: Boomers 2.0. After years of being blamed for killing everything from napkins to chain restaurants, it seems we’ve finally figured out how to adult—buying homes, building wealth, and even catching up to previous generations in net worth. Who would’ve thought?

But here’s the kicker: while we were busy proving the naysayers wrong, we’ve somehow set ourselves up to be the future villains in our kids' complaints. One day, they’ll be griping about how we scored those "cheap" houses in the 2010s and locked in those sweet 3% mortgage rates. And honestly, I can’t wait to hear them moan about how easy we had it. The circle of life, right? We’re just getting started on our journey to becoming the next generation’s scapegoats.

The Real Estate Fueled Rebirth Of Millennials' Financial Prospects
by Eric McConnell, Yahoo Finance

The article discusses how millennials, a generation once thought to be financially doomed, have significantly improved their financial prospects, largely through real estate investments. Research from the Federal Reserve shows that millennials are now wealthier than previous generations were at the same age, with a median household net worth increasing from $90,000 in 2019 to $130,000 in 2022. This wealth surge is attributed to millennials who invested in real estate during the low-interest rate periods between the Great Financial Crisis and COVID-19. These properties appreciated in value, contributing substantially to their wealth. Additionally, millennials who focused on retirement savings early in their careers have also seen considerable growth in their portfolios. This shift indicates that millennials are not only catching up but surpassing previous generations in wealth accumulation.

OPINION
Well, isn’t this a surprising turn of events? After years of being told we’d never get ahead, it turns out we millennials have been quietly rewriting the narrative. Who would’ve thought that our financial comeback would be built on the same foundation as our parents’—good old real estate? All those hours spent browsing Zillow and dreaming of homeownership might have actually paid off.

Nailing those low interest rates was like finding a golden ticket. While older generations were busy calling us slackers, we were busy snapping up homes that have now appreciated like crazy. It’s kind of funny—everyone thought we’d be the "lost generation," but it turns out we just found the one thing that never goes out of style: owning property.

Of course, we’re still figuring out how to balance it all—like why we still hesitate to splurge on heating in the winter—but hey, if it means our net worth is on the rise, I’ll take it. Here’s to proving the doubters wrong—and maybe even surprising ourselves in the process.

Why millennials and Gen Z are too young to be loading up on bonds
by Jared Blikre, yahoo/finance

This article discusses why younger investors might reconsider the traditional 60/40 investment strategy of allocating 60% to stocks and 40% to bonds. Trent Smalley, a Chartered Market Technician and portfolio manager, argues that young people don't need bonds in their portfolios unless they are extremely uncomfortable with market volatility. He explains that bonds are typically used to reduce portfolio volatility and provide steady income, which are more crucial for retirees than for younger individuals with decades of earning potential ahead.

Smalley highlights that over the past 30 years, the S&P 500 had a compound annual growth rate (CAGR) of 7.8%, while bonds only delivered a 3.3% CAGR. He notes that younger investors should focus on long-term growth and take advantage of market dips, especially if they have a 401(k) with employer matching. Moreover, the traditional diversification benefit of bonds has weakened recently as stocks and bonds have become more correlated, particularly during periods of high inflation and rising interest rates. Smalley suggests that young investors are better off consistently investing in index funds, which are more likely to provide substantial returns over time.

OPINION
So, basically, we millennials should ditch bonds and ride the stock market rollercoaster instead? Sounds like a plan! Who needs that “boring” stability when we’ve got decades ahead of us to recover from the market’s wild swings, right? It’s like choosing to binge-watch a thrilling series with all its plot twists rather than settling for a predictable rerun. And let’s be honest, in a world where everything’s unpredictable, why not embrace the chaos and hope our index funds are the ticket to an early retirement—or at least a really nice vacation?

Wealth Building Tips for Millennials
by Steven J Weil, Wealth

The article provides eight key pieces of financial advice aimed at helping millennials navigate the economic challenges they face, particularly the burden of student loan debt. The author, a member of the baby boomer generation, acknowledges the differences between the challenges faced by millennials and those of earlier generations but emphasizes that the financial principles he shares are timeless.

Key tips include starting to save and invest early to take advantage of compound interest, overcoming fears of investing in stocks, and participating in employer-sponsored 401(k) plans. The author also advises millennials to maintain a good credit score, buy second-hand cars to save money, be mindful of small expenditures, open both conventional and Roth IRA accounts, and set clear financial goals.

OPINION
We appreciate the advice in this article, but as a millennial, I think it's important to acknowledge that our financial landscape is pretty different from previous generations. The tips are solid, especially about starting to invest early and managing debt, but it's not just about ignoring advice—we're dealing with unique challenges like massive student loans, a volatile job market, and high living costs. It's not that we don't want to listen; it's just that the solutions need to fit our reality. That said, we’re definitely taking some of these tips to heart, especially about setting financial goals and being smart with investments. Thanks for the perspective!

"Money for Millennials" is a practical guide tailored to help millennials navigate the complexities of personal finance in today's world. The book addresses the unique financial challenges faced by this generation, such as student debt, rising living costs, and the gig economy, while providing actionable advice on how to build a stable financial future.

OPINION
First off, the advice in the book can feel a bit too generalized. It doesn’t always consider the wide range of financial situations that millennials face. For example, if you're dealing with more complex financial challenges or have an unpredictable income, like many freelancers or gig workers, the book might not offer enough detailed strategies.

Also, the content might seem a little too basic for some readers. If you're already familiar with budgeting, saving, and investing, you might not find much new here, as the book mostly focuses on foundational principles.

Another point is that while the book covers a lot of topics, it doesn’t go very deep into any one area. So if you're looking for detailed advice on things like advanced investing strategies or tax optimization, you might find it lacking.

Overall, the book seems to be more helpful for those who are just getting started with personal finance or need a broad overview rather than for those who are looking for advanced or specialized financial strategies.

"Millennials are the most financially cautious generation since the Great Depression. They're focused on saving, investing, and making sure their money works as hard as they do." – Warren Buffett