Will the Millennial Generation Ever Retire Early?

Photo credit: © david_taylor2009

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?

About Eric J. Nisall

Former NY'er, accountant & business consultant, founder of GreenBridge Advisors. Blogging about personal financial, small business topics, and other fun topics at DollarVersity. Fan of the NHL and everything hockey! Follow me on Twitter, Facebook, and on Google+

  • http://twitter.com/MoneyLifeMore Lance@MoneyLife&More

    I think it is people feeling overwhelmed so they take the easy way out and say they are going to keep working to avoid saving. I am definitely going to retire and am saving a significant amount to do so.

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      I wonder if it’s them taking the easy way out or not truly understanding the totality of everything. For instance not understanding the positive effects of compounding beginning at a young age, or not understanding how to go about the saving/investing process to begin with.

  • http://twitter.com/nickelbynickel Andrea

    Yes I’ve started thinking about it and recently started saving 10% of my income (10% of every deposit to my bankaccount) to a savings account. Hopefully I can keep this up, I think the first few months will be the hardest part and that after that I won’t miss the cash! I don’t plan to retire either, not formally anyway, but by that I don’t mean I plan to work until I’m dead or incapable to. To me retirement means being able to work as a please, doing whatever I enjoy. I hope to get to that point, that to me is retirement, it has little to do with working or not working. If by that time I change my mind and just want to sit on a beach… whatever, my goal is to have the ability to choose.

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      Starting is the hardest part, so at least you’ve gotten that out of the way Andrea. I absolutely agree about the definition of retirement. There are people who are “retired” yet still work–only to the degree that they pick and choose what projects or assignments they want to take on. Sometimes its not so much about the money as it is being able to do what they enjoy doing, only on a much more scaled-back level

  • Lauren @ LBee Money Tree

    Retirement has to be a priority-especially for women. We may not get Social Security after all. Good post, even though it made me a little sad.

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      Sometimes the truth hurts. Fortunately, it doesn’t have to end that way. Each person is in control of their own future, and can shape it into whatever they want. It just takes dedication and the sense to begin.

  • http://www.modestmoney.com/ Modest Money

    That is a bit scary that such a high number of young people don’t plan on retiring. That is bound to cause big problems when they do get to retirement age and change their minds. There better be a whole lot of new employment opportunities for older people. Suddenly walmart is going to have to hire 5 or 6 seniors as greeters for each store. There just isn’t enough work that old people can do though.

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      Actually, I would have to disagree with the last part. I have a large number of elderly clients (retired) who still find work. Some are freelance journalists, some teach, and others do handywork in their community. It is true that many companies push out the older workers in favor of cheaper, younger ones but that doesn’t mean there isn’t something out there for the older folks to do to make money.

      • http://www.modestmoney.com/ Modest Money

        But would that still be the case if an entire generation planned to keep working? Sure some people can keep working when they’re older, but many start to get held back by physical and mental limitations.

  • http://twitter.com/MarriedWithDebt John | MarriedW/Debt

    This makes me sad. The consumer-economy has finally become entrenched. Not only will “they” turn 3 jobs into one by increasing productivity, they have made us feel guilty for not working our 3-man job for 50 years until we die. Retirement is laziness – that’s the point :)

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      I don’t know. My generation was supposed to be the “slacker” generation fueled by grunge music and Kevin Smith films, but I’d say it’s turned out ok so far. I never put very much weight into these types of blanket summaries, because it’s simply never the case for an entire group.

  • http://www.financefox.ca Eddie | Save Money

    School debt is definitely a big concern, in Canada and United States. Some are even predicting it as the next bubble. Retirement is very personal I think. Some choose to work into retirement because they choose to, and others because they need to. If I were to answer that question now, I’d say I will work into my retirement. I enjoy work, keeping busy, and my mind entertained.

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      I’d probably be semi-retired. There is only so much traveling and being away from home I can handle at a time. Plus, I enjoy some of the things that produce income for me, so it’s not always “working”

  • http://www.narrowbridge.net Eric

    For me, retirement means not having to work. I should be long debt free when I hit my 40s, let alone 60s, so I will continue to save for a better future. I don’t want to quit working when I am older, I just want to work less and on my own terms.

  • Marie at FamilyMoneyValues

    I’m definitely not a millennial, but I know that we weren’t able to really start saving for retirement until our forties, and we succeeded in retiring by our early sixties, so it can be done.

    Retirement at it’s best is about being able to make choices – work if you want, volunteer if you want, travel if you want, sit around and do nothing if you want.

    I disagree, however with Modest Money when they say there just isn’t that much work that old people can do. Most jobs require mental ability, not physical, so if a person doesn’t loose their capacity, I think the opportunities will be even greater than they have been in the past!

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      Choices are what retirement is about for me as well! I want to be the one to decide how I will live out my golden years. I have a feeling jobs will need to be created for the specific purpose of employing older workers. I know there are plenty who are currently working in a variety of positions, but we have to be honest about the mental aspect as well–the mind is generally the first thing to go in most cases.

  • http://twitter.com/familymoneyblog John Preston

    I’ve seen the same study and took the concern one step further. The millenial generation may not want to retire now, but what about three decades later? The introduction of time into your retirement savings is so critical, it’s scary to think that there may be a whole generation who forfeits retirement because they thought that they wanted to work forever.

    • http://www.dollarversity.com Eric J. Nisall – DollarVersity

      What I found ridiculous about the Wells Fargo study was that is was based on a whopping 1,500 “middle-class” American using a sliding scale based on age. It also eliminated respondents between 20 & 24 while totally ignoring 18-20 year olds in order to focus on “workers”. This is why I laugh at such studies John. They are tailored to get the results they are aiming for. Since when are 18-24 year olds not “workers”? Why ignore sub-20 year-olds altogether? Between this one and my comments on your study on college degrees & wealth post, I’m sure you can understand my skepticism.

  • http://www.mymoneydesign.com/ MyMoneyDesign

    I see this as being a HUGE growing problem. In many ways, I think there are actually many better options now for retirement than ever when compared to old pension plans. The problem is that people just refuse to put any effort into learning about them. I feel like a lone-wolf sometimes with my interest in the subject; but I will definitely retire early due to my efforts. One of the reasons I love doing this blog thing so much is to spread the awareness and teach people how to do better. Its unbelievable how many people think that they will simply “receive money” from their employer when they get older – and it’s sad that they will be in for such a rude awakening!