Here’s how much millennials will have to retire by 2045:


fizkes/Getty Images/iStockphoto

fizkes/Getty Images/iStockphoto

Believe it or not, the oldest millennials will retire in a few decades. Those born in 1981, considered by many to be the millennial’s first birth year, will be able to apply for Social Security benefits starting in 2043.

Read: Suze Oman, Warren Buffett and other money experts discuss how to best prepare for retirement
Discovery: 3 Ways to Prepare for Recession and Retire

Depending on who you ask, accounting for inflation, millennials could need between $3 million and $4 million to retire comfortably. If we want to retire by 2045, we probably need to hit the high end of that range. At that point, most millennials are still only in their 50s (based on birth years from 1981 to his 1996, which is how Pew Research Center defines millennials). ).

Retiring in your 50s means you will need a longer retirement period than usual. Based on lifespan trends, it can take 40 years or more. That’s a very long time to live on a fixed income.

Last year, Charles Schwab’s 401(k) Participant Survey — GenZ/Millennial Focus found that the average amount millennials thought they needed to save for retirement was $1.8 million. I was. Retirement benefits for 30 years are $60,000 a year or $5,000 a month.

But most millennials are not on track to reach that goal. According to a 2022 Vanguard analysis, as of 2021, an American worker aged 25 to her 34 could save an average of $37,211 on a 401(k) plan. From age 35 to her 44, he averaged $97,020 in savings.

Taking the average of these two amounts equals $67,115, and if you want to retire in 2045 with $1.8 million in savings, you’ll need to save another $1.73 million. This means nearly $79,000 in annual savings over the next 22 years.

Some financial experts believe it will cost millennials more than $1.8 million to retire comfortably.

As GOBankingRates previously reported, an analysis conducted by Seeking Alpha found that young millennials are likely to need at least $3.6 million in savings to enjoy a comfortable retirement. This assumes that you will retire by age 62.

Another analysis by Wealthcare Financial estimates that millennials and Gen Zers will need $3 million in retirement savings, reports The Motley Fool. This figure is based on cost of living estimates that a young American will need between $120,000 and $150,000 a year by the time he reaches retirement age.

$3 million is the upper end of the target range. Depending on your lifestyle and where you live, the amount can be considerably lower. Here are some of the other retirement savings guidelines Welthcare Financial recommends for the millennial and his Gen Z.

Read more: 3 ways to prepare for a recession and retire

Not yet? Merrill Edge has the following tips:

  • Start early and take advantage of compounded returns.

  • Make enough contributions to your 401(k) to meet your employer’s requirements.

  • start a personal retirement account

  • Make a catch-up IRA and 401(k) contribution when you turn 50.

Learn more about GOBankingRates

This article originally appeared on Retirement savings: Here’s how much millennials will have to retire by 2045.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *