Retirement. It has been the topic of much discussion in recent years: concerns over pensions disappearing, the performance of the stock market, and more recently the benefits of investing in a Roth IRA among other concerns. As odd as this may sound, the word retirement may not exist in the near future. Traditionally, retirement is synonymous with leaving the work force. One day you feel your nest egg is large enough to take your name plate off the door and it’s nothing but gardening and destination vacations. A new survey shows that the millennial generation is not planning on early retirement. In fact, they don’t plan on retiring.
Working is the New Word for Retirement
According to T. Rowe Price, nearly 70% of those aged 21-50 have a new definition of retirement; they plan on working. A majority of respondents claimed the decision stems from a perception that retirement is indicative of laziness. Only about one quarter said they’d continue working because of poor saving expectations.
Young, Middle Class Wants to Work
The T. Rowe Price survey echoed an earlier Wells Fargo survey that found young, middle class adults the most likely to embrace working in retirement because they want to. Only 25% of those between the ages of 40 to 59 plan working in retirement compared to 45% of those aged 25-39. Not surprisingly, 49% of young adults favor cuts to Medicaid and Medicare.
Saddled with Debt
It’s also no secret that recent graduates are coming out of college with more debt than any other class or generation in history. That has long-term implications as young adults are more likely to put off retirement savings until their late 30′s or 40s to deal with their student loan debt. Not to mention the fact that they’re earning less on the savings they do have. The folks over at MoneySupermarket.com report that while millennials have been blessed with lower inflation rates and interest rates on their student loan debt, those same factors are having a crippling effect on their saving and investment interest.
Implications to Finances
While there is nothing wrong with the idea of working in retirement, as people have been doing it for decades, some people do have some serious concerns about the retirement mindset of young adults. The fact that work might be the new retirement could have serious financial implications for young adults. It all has to do with personal finances and net worth.
Retirement isn’t just a lifestyle; it’s also a financial goal. It motivates people to budget and save. If you are planning on quitting the work force, you make plans to get out of debt and maximize net worth by retirement age. Will millennials still take all of this seriously if they don’t plan on leaving the workforce?
What happens if you change your mind? The most important ingredient for successfully achieving retirement is to start saving as early as possible. If young adults choose to remain in the workforce, will they also delay retirement savings? If so, there may be no way back.
Regardless of whether you want to retire or continue working, planning your finances around the potential of leaving the workforce will help you set goals that keep you financially productive. Just because you want to work until you are 80 doesn’t mean that you’ll be able to, or even have the same desire 30 years from now.
Do you see retirement as being something that is becoming increasingly more difficult to attain? If you are a millennial, have you taken steps to ensure your ability to actually retire?