We’ve spent a lot of words on how retirement is being reinvented and what that means for people on the cusp of or just heading into retirement. But what about the other half of the population? The retirement reinvention, i.e.: how retirement is moving away from squirreling funds as an end-of-life contingency to planning for longevity, is effecting Millennials just as much if not more than older generations.
The Bad News
The idea of retirement at age 65 first popped up in the United States in 1936 with the inception of Social Security. Back then, people weren’t expected to live much past 65, if they lived long enough to cash in at all. With modern advancements in everything from healthcare to sanitation, lifespan in the US is dramatically longer. Around 10,000 people are retiring every day, and Social Security can’t keep up. Luckily for most retiring Baby Boomers, the economy and cost of living allowed them to put together adequate if not generous retirement savings and plans that can supplement their Social Security payments.
The bad news is that this is not the case for Millennials. Half of Millennials don’t have access to a traditional employer-sponsored retirement plan, and its becoming more likely day by day that Social Security will collapse before they can cash in. That’s not all. According to the Economic Policy Institute’s wage tracker, average wages have barely gone up in the past decade, while the price of everything from college degrees to housing and even food had gone up. In fact, the cost of a bachelor’s degree has gone up so much that some Millennials are spending 45% of their income on student loan payments, meaning its very unlikely they’re saving enough for a traditional retirement.
The Good News
It’s not all bad news for Millennials. Though everything is working against them for traditional retirement, the retirement reinvention is providing workable solutions like:
• Technology – Thanks to incredible technological advancements, saving for the future is becoming easier and, dare we say, fun. There are tons of new apps on the market that take the boredom, delayed gratification, and hard work out of saving and planning. The Twine app, for example, helps users set and reach their personal financial goals, from going on a vacation to saving for retirement. It uses an algorithm to come up with a personalized savings plan, and even lets users score points by hitting goals and compete with friends to make the experience more fun.
• Mindset Shift – The retirement reinvention is shifting our cultural mindset of age from “young and old” to just “human.” Getting older doesn’t mean getting idle, giving up on dreams, or waiting around for it to be over. People who live longer are able to contribute longer, making an age mindset shift a major benefit for Millennials.
• Retirement Flexibility – Planning for longevity doesn’t necessarily mean planning for a total retirement. Millennials will have the flexibility to continue working as long as they want, or even how they want. This will allow them more financial flexibility, and therefore ease their current financial strain.
Change can be stressful. Though our modern retirement reinvention might feel like it has some growing pains, its looking like it will end up being a wonderful shift for both older and younger generations.
How have you experienced this retirement reinvention? Tell us about it in the comment section. Don’t forget to check back for more articles on this and similar topics.