The traditional view of retirement needs to be rebooted. At least that’s what the typical millennial thinks.
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For the largest generation in the U.S. workforce, the idea of completely stopping work in your golden years seems outdated.
Millennials have a new view of retirement, which involves retiring sooner, enjoying regular mini-retirements and incorporating more of what they love earlier in life. According to a Bankrate survey, millennials say the ideal age to retire is 61.
New millennial retirement
Instead of retirement being a singular stopping point, millennials see it as a fluid and longer lasting life stage. And they don’t see the benefit of deferring pleasure until you reach a certain age, when the benefits aren’t guaranteed.
Millennials view retirement not as a number, but as a life stage. They want the ability to travel more, donate both time and money to charities and enjoy experiential purchases throughout their working years, thus reaping a higher return on their investment.
In retirement, millennials envision switching from their career income to an income that will supplement their desired lifestyle. They want to pursue passion projects, explore hobbies, engage in activist opportunities and monetize their skills.
This new definition of retirement is already motivating many millennials to start saving. According to a Bank of America survey, over 16 percent of millennials have $100,000 or more in savings.
Many millennials today understand that time is on their side. By investing in their twenties and thirties, they can yield the advantage of compound interest for decades. This can allow small amounts of contributed capital to grow into large balances.
According to a report by the National Institute on Retirement Security, 66 percent of millennials work for an employer that offers a retirement plan. By reaping the full rewards of employer plans and taking advantage of benefits such as employer 401(k) matching programs, millennials have the potential to cement a solid financial foundation.
Ask The Millennial: Have a Personal Finance question? Contact Conor at AskConor@MillennialMoneyMakeover.com.