Nearly one in three millennials have no money saved for retirement, and a quarter of millennials – people between the ages of 18 and 34 – report owing more money than they have currently saved, according to a survey released by the Indexed Annuity Leadership Council (IALC).
“This year, millennials finally surpassed all other generations and now make up the largest share of our workforce, which makes it so concerning that such a large portion of these young people are astoundingly unprepared for retirement,” says IALC executive director Jim Poolman.
Still, out of all generations, millennials are also the most open to retirement savings options that protect against stock market fluctuations and offer the opportunity for growth. According to the survey, 52 percent of millennials showed interest in products like fixed indexed annuities that provide guaranteed lifetime income while ensuring the principal investment is never lost.
“It’s no surprise that millennials, who entered the workforce after the tumultuous 2008 economic recession, are showing the most interest in products that can provide certainty against the unpredictability of the stock market,” Poolman says. “This certainty becomes even more important as our retirement landscape continues shifting to a more pay-for-yourself era.”
So, how can millennials with nothing saved for retirement get started? Poolman has some basic tips:
1. Remember, every penny counts
When you’re young, you have time on your side, so put as much money aside as you can. This might mean skipping a night or two on the town or packing your lunch more often. While this doesn’t seem like much, making one or two small changes can add up to considerable savings.
2. Take free money
Consider contributing to your company’s 401(k) plan or any employer-sponsored available plan. Think of any plan your employer is willing to match as “free money.”
3. Balance your portfolio
As a young professional, you have the luxury to put some of your money into high-risk investments since your retirement is seemingly far away. However, for the safety of your future, it’s important to also consider adding more conservative savings products like health savings accounts or fixed indexed annuities that can provide much-needed balance to your retirement portfolio.
4. Start now
Don’t wait. It’s crucial to start saving for retirement as early as you can. The earlier you start saving, the more likely you are to meet your retirement goals. Even if you can only contribute 1 percent of your salary, anything is better than nothing, and it can add up quickly.
The IALC offers online calculators that can help you see how much you should be saving (taking into account your age and your retirement goal) and whether your current retirement savings will be sufficient.