Fast games

Millennials want a different retirement

Over the past decade, millennials have garnered a lot of attention (good and bad) for their “slacktivism,” job-switching, mountains of student debt, and FOMO culture. But Millennials are growing up, and many are prioritizing financial independence and seriously considering their path to retirement. Unsurprisingly, and unlike the generations before them, they have different ideas of what that path and the ultimate destination will look like.

According to new research from Schwab, millennials are more likely to prioritize travel over home ownership in retirement. They want the freedom to use their savings to pursue their desired lifestyle and passions rather than to seek financial stability. They want flexibility and new experiences more than traditional retirement pursuits.

The Millennial Path to Retirement

As for the path to achieving these non-traditional goals, millennials are also looking for flexibility on that front. They are less focused on a specific amount of retirement savings. Instead, they see the accumulation process as more of a continuum, and they want to pursue their passions all the way to retirement — not just retirement. Plus, they’re less interested in preserving their wealth in retirement and won’t spend as much time managing their investments as baby boomers.

Some of these Millennial preferences may seem incompatible with responsible retirement goals, but this is a generation of action. Millennials, to their credit, are already starting to save much earlier than their predecessors and during the pandemic many have stepped up their engagement and focus on financial planning.

It’s also worth noting that Millennials aren’t just rewriting the retirement script because they can. Major economic and societal shifts are driving these shifts in how young people approach money, careers and life. They encountered challenges different from those of the generations that preceded them. The cost of property has gone up, pension plans have gone down, student debt has increased dramatically, to name a few.

Tips to help millennials on their way

The road to retirement has only gotten tougher over the lifetimes of Millennials. The good news is that many timeless financial planning strategies can be easily adapted to their needs.

Here are the top tips I share with Millennials for reaching their dream retirement:

  • Hide money: The first step in planning for the rest of your financial future is to create a financial cushion to fall back on in anticipation of the inevitable disruptions that life will bring. A few months of savings is a good place to start an emergency fund.
  • Focus on your finances Statenot your retirement Date: Don’t think of retirement as an arbitrary date when a switch is flipped and retirement begins. Instead, target a financial situation that would provide the flexibility to make work optional. It might look like enough savings at age 60 to be able to stop working if necessary, but with the idea that you will continue to work and save until you are emotionally ready to retire. It is important to calculate the numbers to determine the amount needed to feel comfortable. From there, adjust your savings accordingly to grow that nest egg.
  • Cultivate it and protect it: We all want to grow our savings and investments to sustain us throughout our lives. But don’t lose sight of protecting what’s already in place. There is no ‘sure thing’, and that means diversification is important for potential growth as well as stability. Don’t risk more than you can afford and be prepared to re-evaluate your risk tolerance as you go through your investment journey.
  • Don’t get derailed by FOMO: New investment trends can be very enticing, but getting caught up in the rush of bright possibilities can lead to setbacks that limit future potential. Remember, investing is about helping money grow over time to achieve your goals, not about speculating or chasing fads.
  • Think long and short: Planning for retirement is a long process that takes time and patience. It also requires flexibility to adapt to changing circumstances. No one can predict all the challenges ahead, or if their future selves might see things a little differently than their current selves. Create a plan and review it at least once a year, knowing that there will be changes along the way.

The essential

Much like baby boomers and Gen Xers, millennials have distinct generational characteristics that set them apart, but at the same time, they are not a monolith. Millennials will take many different approaches and paths to retirement. Their personal life will take unexpected twists and turns that could alter some of their goals along the way.

Good financial planning that starts early is the key to success, no matter where you want to go. It never changes.

Diversification strategies do not guarantee profit or protect against losses in declining markets. Investing involves risk, including loss of principal.


Schwab Smart Wallet Specialist, Charles Schwab

Amy Richardson is a CERTIFIED FINANCIAL PLANNER™ Professional and Schwab Smart Wallet Specialist. Amy is focused on providing internal teams, clients and prospects with training, updates and information on Schwab’s offerings and investment philosophy, including Schwab Smart Portfolios (the automated investment service Schwab) and Schwab Premium Smart Wallets (combining automated investing with a comprehensive financial plan and unlimited advice from a CFP® professional).

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