Maybe it is this generation’s record-breaking student debt, or maybe it’s the trend of getting married much later in life, but millennials are known for putting off adult responsibilities. The generation is pushing back the big financial decisions in life like buying a home and establishing a viable retirement plan.
A new survey from the Indexed Annuity Leadership Council (IALC) reveals that 37% of millennials say they have no money for retirement, and 24% say they owe more than they’ve saved.
Across all generations, millennials are the least prepared but the most optimistic about the idea of saving for retirement. Most millennials think 401(k) when they think retirement, but with 401(k) plans becoming less fruitful, pensions dwindling and social security become less “secure,” they are looking to other options. So what is most popular with this generation? CDs, IRAs, annuities, cash under the mattress?
The IALC survey shows that 52% of millennials—more than any other age group—are interested in annuities. A fixed indexed annuity (FIA) is a savings vehicle that can increase based on the market, but keeps its value even when the market goes down. The goal of an annuity is to retire with steady, secure income.
Whichever method of saving for the future, most millennials acknowledge that the time to save is now. It could be as simple as $20 a month or a well-spent graduation gift, preparing the nest egg today will ease the transition from debt-burdened millennial to comfortable retiree.
Since this generation seems to have no idea where to start saving for their future Jim Poolman, Executive Director of the IALC, shares some simple savings tips financial institutions can use with their millennial customers:
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 a month.
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.” A 401(k) plan might not be enough for retirement, so consider other strong options such as a fixed indexed annuity.
Americans are living longer. They need a savings plan that works for them over the long haul, making annuities critical in helping provide the income they want and need.
Have an Emergency Fund
You never know when you’ll decide it’s time to leave your job, your employment suddenly ends, or you need some cash for a car or health needs. Make sure you have a few months’ pay on hand in your bank account to help you through those challenging times.
Fulfill your Dreams
Think about the life you want in retirement with an advisor – to lounge in your backyard or travel the world. Based on your goals, develop a retirement plan that will suit your needs.
Mike Esser works in the communications industry, focusing on finance and retirement investments. He is a regular contributor of content on retirement savings.