Millennials are considered to be one of the most educated and trained generations in history. The learning resources and the historical moment confirm this. However, it is also a generation that is going to have some economic problems that their parent’s generation did not have. One of the most relevant is retirement.
It is already an accepted fact that the retirement of Millenials is going to be more complex than that of Baby Boomers. Let’s try to understand why.
What is going to change in Millennials’ retirement?
There are two important aspects you should consider to understand how your retirement will change if you are a millennial.
The first one is how the labor market has changed. In the recent past, careers used to be fairly straightforward. A person could spend practically their complete working career in just one or two different jobs.
This translated into better possibilities such as internal promotion opportunities in companies, solid and steady salaries over time, and the chance to build up very long-term retirement savings accounts.
Nowadays, careers are very different. It is quite common to change jobs many times, to have many different salary ranges and the possibilities for promotion are, at the very best, slower.
On the other hand, the second relevant aspect is that we are not simply increasingly our lifespan, we are also becoming more active. This means that the purchasing power of a retiree has to be higher than it was three decades ago.
People spend much more and for a longer time in retirement.
What can millennials do when thinking about retirement?
For Millennials, future retirement has to be a key aspect of their financial planning.
If we review the opinions of any personal finance analyst, we will see that they all agree that this is an absolute necessity. To that end, there are a few relevant issues that every millennial should always keep in mind:
- Start saving early for retirement: the longer you start saving, the more money you will have in your savings account. The recommendation is to start saving even as soon as you enter the labor market.
- Diversify savings sources: In addition to retirement insurance, it is recommended to diversify savings and investments as much as possible. Long-term diversification is one of the best tools to protect your investments and savings.
- Calculate well the relationship between your expenses and future income: this is a fundamental task. It is necessary to make a good forecast of expenses and income in the future. Some techniques and applications allow you to make these calculations
In conclusion, Millennials are going to have a more complicated retirement than the generations immediately before them. Their retirement will be later, they will need to have more money saved and their expenses will multiply.
Being able to take a long-term view of this situation and focus on answering is probably the best action that can be taken for a good future retirement.