Millennials are doing very well financially by many metrics. Nonetheless, fewer young folks are considering traditional retirement.
According to Wells Fargo’s head of consulting and planning, Michael Liersch, retirement is becoming less important.
“That was always the top goal ten or fifteen years ago,” he remarked. Nowadays, embracing life in the now is more important.
The ultimate goal may not be to stop working and rest in my Adirondack chair, he added, despite the fact that this generation is highly focused on accumulating riches. It might not be that.
According to a 2024 survey from Edelman Financial Engines, 37% of Americans expect their retirement to look different than it did in prior generations.
A more active and adventurous lifestyle is what most people think that entails. According to the report, 32% of respondents believe they will never be able to fully retire.
According to the survey, this stands in stark contrast to previous retirement stereotypes, which prioritized stability and leisure.
According to a St. Louis Federal Reserve analysis of 2022 data, the median wealth of older Gen Zers, or those born in the 1990s, and younger millennials more than quadrupled in recent years.
According to data produced for CNBC by Fidelity Investments, the number of millennials having seven-figure retirement accounts also increased 400% as of the third quarter of 2024 as compared to the same period the previous year.
According to another TransUnion survey, millennials are also more likely than previous generations to state that their income increased in the last few months and that they anticipate more increases in earnings potential in the upcoming year.
According to the most recent Federal Reserve data as of the third quarter of 2024, the combined value of millennials has increased from $3.94 trillion five years ago to over $15.95 trillion now.
However, Brett House, a professor of economics at Columbia Business School, noted that a lot has changed for younger generations as well.
In light of the transition from defined benefit to defined contribution pensions or the complete elimination of workplace pensions, millennials’ assets and relative financial stability are based on how well they fare against immediate needs like down payments for homes or emergency medical bills, as well as their ability to earn enough money to replace salaries and wages in retirement, according to House.
According to him, those who reach retirement age are now more reliant on their own resources and Social Security because the majority of younger folks no longer receive any form of pension.
‘People are really feeling the cash crunch’
Sophia Bera Daigle, founder and CEO of Gen Y Planning, a financial planning company for millennials, stated that there are numerous financial priorities that everyone is attempting to meet at the same time.
In addition to saving for retirement or future college expenses, many millennials have to deal with large student loan amounts, mortgages, auto payments, and child care expenses, she noted.
According to CNBC Advisor Council member and certified financial planner Bera Daigle, those in their 30s and 40s are particularly feeling the financial pinch. Even though their net worth is increasing, they don’t feel like they’re making progress.
According to her, that has also influenced millennials’ shifting perspectives on retirement.
Retirement, according to Bera Daigle, was about escaping the grind and playing golf when I first entered this industry.
She went on to say that flexibility is now more important. We don’t know what retirement will look like in 20 years, so choosing the work one wants to undertake in one’s 60s is given much greater weight.
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