Some millennials are longing for eventual retirement, taking a page from the days before the United States created Social Security.
A new survey by Natixis Investment Managers found that less than half of millennials say they factor federal pension programs into their retirement plans, compared to nine in 10 baby boomers.
Instead, most of the respondents in that age group (usually defined as those born between 1981 and 1996) said they could use their retirement savings to get them through their golden years. I’m here. And one in five of her millennials told Natixis that she expects her children to support her financially.
From basement to garage
That view of retirement may reflect the reality of retirement today.At this point, retirees are getting just 77 cents for every dollar of benefits, said Dave Goodsell, executive director of the Natixis Center for Investor Insight. Given these concerns, millennials are relying on multiple sources of income and post-retirement support, including support from their children who may not yet be born.
“We estimate that 20% of the generation that started in their parents’ basement ends up in their kids’ garage,” Goodsell told CBS MoneyWatch.
He also pointed out that this view could be attributed to the increasing trend of multigenerational households in the United States.
About half of all 18- to 29-year-olds lived with their parents last year, according to the Pew Research Center, but there is a growing segment of seniors living with their adult children.
Baby boomers, however, have very different expectations for their retirement income. Natixis found that only 2% of his baby boomers (the generation born between 1946 and his 1964) expected their children to help them in old age. Most people rely on social security as well as retirement and personal savings.
One of the biggest generational differences in retirement planning stems from attitudes toward Social Security. About 8 in 10 of his millennials believe that Social Security benefits will be reduced “dramatically” by the time they retire, compared to 4 of his 10 baby boomers. A study by Natixis revealed.
“For years, we’ve heard threats that Social Security is ‘going bankrupt,’ and it weighs heavily on individuals,” Goodsell said.
As baby boomers reach retirement age, the number of social security beneficiaries is being pushed up at a faster pace than the number of young workers.But the program’s proponents, for example,About the taxes that go into paying social security. Income over $160,200 is exempt from Social Security tax in the current year.
Certainly, millennials aren’t the only ones worried about Social Security. According to a recent Allianz Life survey, three of his four adult girlfriends said they didn’t use the program to plan for retirement.
But such a view may ultimately hurt Social Security, rather than help it survive. For example, if young voters believe a program is doomed to collapse, they are less likely to vote for policymakers who take steps to strengthen the program and keep it intact for future generations. may become.
$186,000 per year
According to Natixis data, every generation is far from reaching their retirement goals. A millennial thinks he needs about $900,000 in retirement savings to quit his job, but the median account balance for this generation is just $32,000. Natixis calculates that he would need to save an average of $35,000 a year to reach a larger savings goal.
It may seem difficult, but it is not impossible. For one, millennials with retirement plans lost more income than baby boomers and Gen Xers, contributing 16% annually compared to less than 10% for older generations. Yes, says Goodsell. I got it.
Many baby boomers may not be able to save enough money for retirement, at least not in the style they prefer. The median account balance is $120,000. A typical baby boomer would have to save $186,000 a year to reach their goals, Natixis said.
“Baby boomers are trying to adapt and say they will work over 67 1/2. Work up to 70 and work as many hours as they can,” Goodsell said. “It’s kind of scary.”