Retirement for Millennials: Planning for a Future That Seems Decades Away

What if we asked you to look at millennial retirement a different way? What if instead of looking at saving and investing your income for something that’s going to happen 30 to 40 years from now, you instead look at it as planning for the future and preparing for the unexpected?

If COVID-19 taught us anything in 2020-21, it’s that anything — even a global pandemic — can disrupt our financial plans. A retirement plan can help you prepare for unexpected gaps in income. 

This is a different way of viewing retirement planning for millennials (born 1981-1996), as well as post-millennials (sometimes referred to as Generation Z born 1997-2012) from the way your GenX parents view it.1 Regardless of how far off it seems though, retirement happens. You’ve likely already heard from your parents and grandparents how fast time flies and how many wish they’d started saving for retirement sooner.

Still, you face additional struggles that make retirement planning difficult, like stagnant wages, economic uncertainty, and the burden of debt. In fact, that’s where we’ll start: Millennials’ retirement savings can begin by managing your debt.

Millennials and Money: Managing Debt in Your 20s and 30s

According to Experian’s State of Credit 2020: Consumer Credit During COVID-19, the average millennial is carrying just over $27,000 in consumer debt and those who own houses have a mortgage balance averaging just over $230,000.2 College graduates can tack on another $37,500 in student loans, according to Investopedia.3

While debt reduction strategies vary, and should reflect each individual’s unique circumstances, it is an important part of retirement planning. For millennials, managing debt is an important factor in successful long-term planning. This includes paying off debt, limiting the use of credit and protecting overall credit scores to improve access favorable terms when credit is needed. 

There is no one-size-fits-all strategy for managing debt, which is why it’s best to meet with your financial advisor or an accountant, who can help you prioritize your debts and come up with a strategy. 

You might find this related post helpful, which explains the importance of managing your debt-to-income ratio

Millennials Saving for Retirement 

What should millennials invest in? Some advisors might point you toward aggressive growth stocks and funds, the best financial strategy for someone in their 20s or 30s should align with their financial goals, their tolerance for risk, their debt-to-earnings ratio and the millennials’ retirement age. 

As much as we don’t want to sound like your parents: They are correct. Start saving now, so you can avoid setbacks in your 50s, 60s and beyond.

As much as we don’t want to sound like your parents, they are correct: Start saving for retirement early so you can help yourself recover from unexpected financial setbacks, like losing a job. It also allows you to potentially weather economic ups and downs. 

To save in your 20s and 30s, starting with budgeting. There are many apps and online tools that make budgeting easy. Simply recording your income and every expenditure you have will give you a new perspective. Look for areas that can be trimmed and plan on saving that amount each month. 

Millennials’ 401(k) plans sponsored by employers are a great way to start your retirement plan. Did you know that you aren’t on your own when it comes to selecting investments for your 401k? If you have access to a 401(k), sign up for it. Many companies match contributions up to a certain limit, so if you can, you’ll be smart to contribute at least up to the maximum your employer will match. 

But don’t stop there. A 401(k) plan sets a foundation for your retirement strategy, but there are other tools that you can (and probably should) consider. A financial advisor can help you understand your options. 

Read more about Americans and their 401(k)s

What Should Millennials Invest In?

Life tends to change quite a bit in our 30s, which is when we tend to start families and invest in our first homes. 

You might want to consult with a financial advisor about other financial instruments, such as a Roth independent retirement account or Roth IRA. These accounts are funded with after-tax dollars, and the money you contribute is not tax-deductible. When you withdraw funds, the money is tax-free. 

Last but not least, you need to carefully consider how much money you actually need to retire. This is not an easy number to calculate because it depends on many factors such as the type of lifestyle you want after retirement and how long you plan on working. An experienced financial advisor can help you evaluate your financial situation today, your retirement goals for the future and create a strategy to help you get there.

When Will Millennials Retire?

A Google search for information about millennials and retirement will deliver so much information, your head will spin. There’s plenty of good headlines, like, “Millennials are better prepared for retirement than their Gen X parents.”4 

No, wait: “Millennials are falling behind in their retirement plans.”5 It gets worse: “Millennials are facing a retirement crisis.”6

It’s enough to make you want to slam your laptop shut and browse Netflix, right? 

Most millennials will begin to retire around the year 2050, which is more than a quarter of a century from now. It’s not too late to start financial planning for millennials, and here’s more good news: You don’t have to be wealthy to work with a financial planning firm to lay out a blueprint for financial clarity

We are an independent firm helping individuals create retirement strategies using a variety of investments and insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

All investments are subject to risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. 00920407 05/21


1 Statista. July 1, 2019. “Resident populations in the United States in 2019, by generation.” Accessed April 22, 2021. 

2 Stefani Wendel. Experian. Oct. 20, 2020. “State of Credit 2020: Consumer Credit During COVID-19.” Accessed April 22, 2021.

3 Daniel Kurt. Investopedia. March 16, 2021. “Student Loan Debt: 2020 Statistics and Outlook.” Accessed April 22, 2021.

4 Maurie Backman. The Motley Fool. Feb. 1, 2020. “Millennials Are More Prepared for Retirement Than GenXers, Data Shows.” Accessed April 22, 2021.

5 Alicia H. Munnell. TheAgenda. June 7, 2018. “Millennials and Retirement: How Bad Is It?” Accessed April 22, 2021.

6 Mark Hulbert. MarketWatch. Aug. 29, 2019. “Opinion: Millennials Are the New Face of the Retirement Crisis.” Accessed April 22, 2021. 

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