2. Social Security is more secure than many realize
Most millennials aren’t optimistic about the future of Social Security. Only 6% think this retirement safety net will be around when they stop working, according to the Employee Benefits Research Institute (EBRI). Interestingly, these numbers are actually higher than they were in 1995, when only 1% of people between the ages of 25 and 34 believed this government program would survive through their retirement.
Young people have good reason to be worried about the future of Social Security. The Social Security trust fundis currently expected to run dry in 2033, roughly a decade before the oldest millennials (those born in the early 1980s) will start to retire. But even with the trust fund depleted, the program will still be able to pay out about 75% of scheduled benefits with money from taxes. So, while Social Security is not in great shape, there’s still a good chance today’s young people will see some benefits in retirement.
3. Many millennials aren’t saving anything for retirement
While 80% of millennials say that the recession of 2008 taught them a valuable lesson about the importance of saving, many of them aren’t putting that knowledge into practice. Only 55% of milllennials surveyed by Wells Fargo report that they are saving for retirement. Reasons for not saving include having too much debt, focusing on other financial priorities, and not having enough extra cash to set aside for the future.
4. Even when millennials do save, they often don’t save enough
Thirty-four percent of people ages 25-34 have less than $1,000 in any type of savings, including retirement accounts, according to EBRI. Another 23% have less than $10,000. That’s not surprising, considering that the Wells Fargo survey revealed that about half of millennials who do save set aside between 1% and 5% of their income. That’s well below the 10% savings target many retirement experts recommend. Unless they step up their savings game, a lot of millennials will end up with too-small nest eggs upon retirement.
The news isn’t all bad, however. A significant minority of young people have between $10,000 and $25,000 in savings, according to EBRI. In fact, they’re more likely to have between $1,000 and $25,000 saved compared to their older Gen X peers.