Why Millennials Should Be Saving for Retirement
Many experts advise millennials to start saving money for retirement now. The future of Social Security benefits and if they will be available when most millennials retire has been a hot topic. Whether there will be benefits or not, experts advise to save as if there won’t be any. The earlier people start saving the more money they’ll have at retirement. According to Fidelity Investments, there is a 75 percent increase in the number of millennials participating in a defined contribution plan such as a 401(k) in the last 10 years.
Why Millenials Should Be Saving for the Short Term
Other experts believe millennials should invest in themselves and save for the short term. Millennials who graduated during the Great Recession carry a lot of debt. According to a Federal Reserve Bank of New York report on household debt, student loan balances climbed by $29 billion in the first quarter of 2018. And, almost 50 percent of millennials carry a high interest rate credit card debt according to a NBC News/GenForward survey. These experts believe that saving for the future hinders millennials from solving their current financial issues. So, what’s the right answer? Should millennials start saving for retirement now, yes or no?
Pros to Saving for Retirement Now
- Larger amount of retirement funds
- Financial independence and security
- Compound interest
Cons to Saving for Retirement Now
- Less money to pay down debt balances
- Can’t invest in entrepreneurial endeavors (ex: start a business or purchase a home)
- Saving for a rainy day is difficult
Beginning to save for retirement now may be possible for some millennials especially those who don’t have debt. They may be able to upkeep a personal savings account and put money into their retirement fund. There is no wrong or right answer to when millennials should start saving for their retirement. Each person needs to evaluate their individual financial situation and make the decision that works best for them.