The interesting truth about why millennials aren't saving for retirement.

The truth about millennials and money is complex.

Millennials face different economic challenges than older generations did. I can speak from experience. Pensions feel like unicorns to us, and most of us live with a little monster called student debt on our backs that eats away at our paychecks. As a result, we have different financial priorities and goals, especially when it comes to retirement.


I would probably be less surprised if I came across this scene in a verdant pasture than if I saw a job posting with "pension plan" among the benefits. Painting by Domenichino, via Wikimedia Commons.

Admittedly, many millennials don't think hard about retirement at all. In fact, a recent study found that only 29% of millennials are "actively planning" for retirement ... but the real question is why. Why don't millennials think about retirement? And are we going to be stuck in cubicles until we're in our 80s?

Here's what the facts say.

Things may not be as bleak as they seem. GIF from "The Simpsons."

1. It's true: Millennials are not on track to cover our expenses in retirement.

When millennials think about retirement, they seriously lowball the amount of money they expect to spend, according to the Insured Retirement Institute and the Center for Generational Kinetics. Most millennials expect to spend $36,000 per year, but the average retired person actually goes through more like $47,000.

Another dicey finding from this study? Almost a quarter of millennials think they're going to bankroll their retirement years through the lottery or financial gifts. Yikes.

2. At this rate, many millennials will probably have to delay retirement, which means (in some cases) working until age 75.

A lot of millennials aren't planning to save for retirement until they've paid off their student loan debt, which can take a decade or more.

And it's more than just retirement that's getting delayed. In fact, one-third of recent graduates are saying that they're planning on living at home right after graduation so they can start paying it back. It's a domino effect that delays all sorts of life decisions, like getting married or buying a house.

Photo via 401(K) 2012/Flickr.

3. But more millennials are saving a decent amount of money — and sooner than their parents.

Last year, one survey found that about 56% of millennials are saving at least 5% of their income, which is 6 points higher than the year before! And other research has found that this generation began saving at a median age of 22, which follows a downward trend — reports show Gen X started around 27 and boomers at 35.

4. Plus, Americans in general (not just millennials) are planning to retire later.

In fact, the lack of focus on retirement might have more to do with a switch in mindset than a lack of financial knowledge. Stats show that the number of non-retired people who say they plan to retire after age 65 has grown from 14% in 1995 to 31% in 2009 and 37% in 2015. The expected age at retirement has been creeping up for a while.

Nary a latte in sight. Photo by ITU Pictures/Flickr (altered).

When most millennials entered adulthood, the economy was collapsing, the job market was super bleak, and the housing crisis was in full swing.

So while the majority of millennials appear to be pretty good at saving money when they can, the context is important. In general, millennials tend to avoid investments because the stock market seems like a house of cards, and the job market still feels fairly tenuous.

Millennials do, in fact, have financial priorities. But for most of them, there's a generational switch going on: Quitting work for the last couple decades of their lives isn't at the top of their priority list. Most 20-somethings are taking advantage of 401(k)s when they can, but they're also saving their money for meaningful experiences — like travel — because they'll be satisfied by a "semi-retirement."

You can't do this with an IRA. GIF from "Mad Men."

Since millennials are incredibly committed to finding jobs that they're passionate about, working past age 65 doesn't seem so bad.

More
True
TD Ameritrade
via The Guardian / YouTube

Beluga whales are affectionately known as sea canaries for their song-like vocalizations, and their name is the Russian word for "white."

They are sociable animals that live, hunt, and migrate together in pods, ranging from a few individuals to hundreds of whales. However, they are naturally reticent to interact with humans, although some solitary belugas are known to approach boats.

Once such beluga that's believed to live in Norwegian waters is so comfortable among humans that it played fetch with a rugby ball.

Keep Reading Show less
popular

Many of us are too young to remember the hijacking of Pan Am Flight 73 of 1986, much less any details about it. But thanks to a viral Facebook post from Misfit History, some attention is being shed on an incredible heroine who saved many American lives in the standoff.

The post reads:

Keep Reading Show less
popular

The truth doesn't hurt for an elementary school teacher in California who's gone viral for teaching her class an empowering remix of one of Lizzo's hit songs.

Ms. Mallari — who teaches at Los Medanos Elementary School in Pittsburg, east of San Francisco — took the singer's song, "Truth Hurts," and reworked the lyrics to teach her students how to be great.

Lizzo's song made history this year for being the longest running number one single from a female rap artist. The catchy original lyrics are about boy problems, but Mallari's remix teaches her students about fairness, helping each other out, and embracing their own greatness.

Keep Reading Show less
popular
via Newsy People / Twitter

The internet was ablaze after notoriously private actor Keanu Reeves, 55, walked the red carpet at the LACMA Art + Film Gala on Saturday with his new girlfriend, artist Alexandra Grant, 46.

It was refreshing to see a man in Hollywood dating a woman who's age-appropriate. Older actors are notorious for being with women half their age.

Keep Reading Show less
popular