Here’s Why Millennials Fail at Retirement Savings
Millennials are the people who were born between 1981-and 1996, these people are either in their late twenties or mid-thirties, striving in their careers to reach stable positions. According to studies, millennials are way behind in their retirement savings compared to early generations, and it is anticipated that millennials will have to face a tough time in their retirement if the government does not improve the retirement policies. The following are some reasons why millennials are unable to save enough for the future.
Faced Three Economic Meltdowns
First, in 2001, millennials suffered from the dot-com bubble economy, and then in 2008, they faced great recessions. Both of these economic downturns worsened job markets. Millennials were not able to find their desired jobs, nor were they offered justifiable salaries and they had to compromise on low salaries. Also, these downturns increased the college debt rate, according to studies millennials had to pay 40% more cost of study debt than previous generations and still, many millennials are in such debt. Also, these economic recessions surged inflation, increasing 20% the cost of living for millennials.
And when millennials are either in the midway of their career or on the way to seeking middle positions, the covid’19 hit the world, which caused several people to be unemployed, and most of them were millennials, as most of the senior positions were secured by the older people in the organizations. The world has not yet recovered from the pandemic losses, and again, inflation rates are increasing rapidly.
Further, according to the survey, only 55% of millennials are eligible for employer-sponsored insurance and retirement plans, compared to earlier generations, where 77% of Generation X and 80% of baby boomers were eligible for the retirement plans. Also, many companies have stopped providing pension plans to their employees.
With all such economic crises and the deteriorated job market, millennials are unable to get out of paying their debts and affording their daily expenses, so how can they think about saving for the future? The cost of living is way higher and salaries are way lower for millennials compared to earlier generations, because of which millennials are way behind in savings.
They Want the Best of Everything
Millennials desire to have the best of everything, they are always in competition with their fellows to acquire the best and most expensive things, whether it’s gadgets or clothing. And to win this competition they are ready to pay a premium for example, when Apple announces its pre-bookings of upcoming cell phones, within hours, the pre-bookings get closed because all the youngsters fill up the block.
Also, millennials possess a unique trait of getting bored very quickly, they always seek the new and latest things in the market.
They Get Trapped in Marketing Stunts
Millennials get easily convinced by marketing offers such as discounts and cashback, they impulsively buy a lot of things that they actually do not require. These over expenditures drag them to have less money for their regular expenses, and it is not uncommon that they use credit cards or take loans to fulfill their primary needs. Millennials often do not pay their credit card bills on time, because of which the debt gets accumulated, and they don’t find a way to get out of the debt trap.
Millennials Are Financially Illiterate
Millennials are not disciplined enough to pay their bills on time and because of this, they have to pay penalties and fines. They don’t know how to intelligently spend their money, and save some extra money for rainy days. Their “you only live once-YOLO” mindset does not let them realize the importance of savings as they only concentrate on the present.
Neither do most Millennials focus on investing their money to generate other sources of income nor do they save the money in long-term retirement security accounts that can provide them with tax-free benefits after they reach their retirement age of 70 years?
Millennials are unfortunately bearing more cost of living, more cost of educational debt, home loan debts, and earning a lesser amount of salaries compared to the previous generation. Also, they are not fortunate enough to enjoy employer-sponsor retirement and pension plans, which means the sole responsibility for the savings is on the individuals. Further, millennials’ competitive and impulse buying habits drain money excessively without providing them with any long-term advantages. It is high time respective authorities should start educating millennials about the retirement savings benefits and intelligent strategies so that they can enjoy the benefits later in the future.
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