By Bill Taber
Unlike previous generations, millennials’ retirement goals are weighted by student loan debt and a changing work landscape. Despite the challenges, millennials have a unique opportunity to redefine the path to a stable retirement.
At TABER Asset Management, one of our custom-tailored services is retirement planning. In this article, I break down specific millennial retirement trends to illustrate how professional knowledge and experience can help you overcome any financial challenge and stay ahead of the curve.
Challenges
First, a quick definition: millennials are the generation born in the years 1981 to 1996.
Because of their student loan debt and the shifting nature of the workforce, millennials often find it hard to prepare for retirement the traditional way, requiring them to get creative and strategic with their financial planning.
Let’s take an in-depth look at the obstacles millennials face as they struggle to save for their golden years:
Student Loan Debt: Debt from student loans may significantly hinder millennials’ ability to save for retirement. Due to the burden of large monthly loan repayments, millennials frequently have to put off retirement savings in favor of paying off debt in order to survive. Their long-term retirement fund may be significantly impacted by this missed opportunity to accumulate compound interest.
Gig Economy: The emergence of the gig economy poses a complex challenge for millennials who are planning for retirement. It provides freedom and flexibility, but it frequently lacks the standard retirement advantages offered by employers, such as employer-matched 401(k) plan contributions. Because of this, it’s more difficult for millennials to save regularly for retirement and to take advantage of workplace contributions, which can greatly increase their nest egg.
Delayed Career Progression: Millennials’ retirement savings plans can be thrown off if their careers grow slowly. There may be fewer peak earning years to contribute to retirement if they enter the workforce late or climb up the corporate ladder slowly.
Rising Living Costs: Millennials’ retirement goals are severely impacted by the rising cost of living. They may have less spare income to put toward retirement savings due to rising housing, healthcare, and basic need expenditures. They could be forced to put their immediate living expenses ahead of their financial future in order to make ends meet.
Opportunities
Despite the retirement savings challenges they face, millennials have unique opportunities to overcome those challenges. Specifically, their advanced comfort-level with technology combined with increased financial awareness, multiple income stream potential, and work-life longevity are key:
Technologically savvy: Not only does this tech savvy make daily life more productive for millennials, it also enables increased income options and financial guidance. Millennials can use a variety of services, including investing platforms and budgeting tools, from a computer, tablet, or smartphone—often for free or at very little cost.
Financially aware: In contrast to previous generations who might have approached money more passively, millennials are actively pursuing information and placing a large value on financial planning. Their ability to make informed decisions, budget wisely, investigate investment options, and steer clear of frequent financial hazards is made possible by their financial literacy.
Side hustles: As mentioned previously, the gig economy lacks employer-sponsored retirement benefits. Despite that hurdle, the gig economy enables multiple income streams that can be strategically channeled into retirement savings, such as Traditional IRAs, Roth IRAs, SEP-IRAs, Simple IRAs, and Solo 401(k)s.
Long-term gains: When it comes to retirement savings, millennials have one major advantage: time. Millennials have a longer investing horizon than earlier generations, who may have had fewer years of employment before be forced to retire. This translates to the power of compound interest. Even small amounts can increase dramatically over decades if contributions to retirement accounts are made consistently and at an early age. With this long-term strategy, millennials can withstand market swings and potentially benefit from periods of prolonged growth.
Seek Professional Guidance
One of the better ways for millennials to overcome retirement savings challenges and convert opportunities into actionable steps is to seek the guidance of a professional financial advisor.
Finding an advisor who provides personalized service tailored to your generation is the icing on the cake. At TABER Asset Management, you are not simply a name and number. Our team spends time getting to know you, so we can fully understand your financial goals and work with you to pursue them.
Get started today by scheduling a 15-minute intro phone call online or reaching out to us at 515-557-1860 or invest@taberasset.com.
About Bill
Bill Taber is President and Founder of TABER Asset Management, an independent, fiduciary wealth management firm that strives to do one thing well: manage their clients’ money by creating wealth, building wealth, growing income, and preserving capital so they can experience financial freedom. With more than four decades of experience, Bill is dedicated to building relationships with his clients and their families and walking alongside them as they navigate financial decisions. His favorite days are the ones when he gets to witness the joy and relief on his clients’ faces when they realize they can pursue their dreams and live their ideal lifestyles. Bill is known for going the extra mile, getting things done with integrity, and working with a stewardship mentality.
Bill graduated from the University of Iowa with a bachelor’s degree in business administration and fell in love with the profession when he got to help one of his first clients—his father—turn his lifetime of hard work into a dream retirement. He got his start in the industry as a corporate services representative for Bankers Trust Company and spent decades working as Assistant Vice President of E.F. Hutton & Co. and First Vice President of Principal Financial Securities. He is also a graduate of the E-Myth Worldwide Mastery Business Development Program and is Series 65 registered.
In his spare time, Bill enjoys giving back to his community and served 11 years as a member of the Board of Trustees of Broadlawns Medical Center and 14 years as a Community Representative to their Board Finance Committee. He is also one of the founding members of the Greater Des Moines Connections Mentoring Program. When he’s not working, you can often find Bill spending time with his family and participating in one of his many hobbies, which include traveling to national parks, presidential libraries, and foreign countries; gardening; reading non-fiction; and practicing yoga, Pilates, and meditation. He also loves the simple joys of listening to music, going for walks or bike rides.To learn more about Bill, connect with him on LinkedIn.