Summary
Gen Z and millennials need between $3 million and $5 million in retirement savings due to inflation.
Facts
- Gen Z and millennials need $3 million to $5 million for a comfortable retirement due to inflation.
- More than 7 in 10 investors believe that $3 million to $5 million is the ideal retirement savings target.
- The rise in inflation has led to a three- to five-fold increase in the recommended retirement savings target.
- Managing towards an unknown future, including uncertain prices and lifespan, adds to retirement anxiety.
- Bloomberg customers, who have high incomes and careers in finance, were surveyed for the study.
- The US government debt will increase by $5.2 billion per day, adding to the need for increased savings for retirement.
A recent survey conducted by Allianz reveals that 61% of Americans are more afraid of depleting their savings during retirement than dying, highlighting the concern over outliving one's financial means in old age.
Canadian millennials, especially homeowners, are expected to face significant economic damage and high interest costs in the coming months due to rising interest rates, according to a report by RBC, leaving them vulnerable to job losses and straining their high levels of debt.
Almost half of Generation Z adults and 39 percent of millennials do not expect to receive any Social Security benefits they have earned, according to a survey by the Nationwide Retirement Institute, with concerns growing over the program's insolvency within the next decade.
Individuals between the ages of 40 and 59, known as Gen X and younger baby boomers, experience the most stress and struggle with managing the concept of longevity, making it crucial for them to start planning for their future and seek guidance from financial advisors, according to research from Transamerica and the Massachusetts Institute of Technology AgeLab.
Canadian Millennials are struggling financially compared to previous generations, with higher levels of debt, stagnant incomes, and less disposable income, which could amplify the impact of an economic downturn, while Boomers are faring much better.
The middle class faces distinct challenges that can hinder their journey towards wealth accumulation, including high-cost degrees with limited returns, overextending with unaffordable mortgages, relying on credit cards to bridge budget deficits, falling for get-rich-quick schemes, and succumbing to societal pressure to live extravagantly. By being discerning with education investments, avoiding new car loans, not overcommitting to mortgages, refraining from using credit cards to fill budget gaps, being wary of get-rich-quick schemes, and resisting societal pressure, individuals can better navigate these financial pitfalls and work towards financial stability and wealth.
A CNBC survey found that 74% of Americans are feeling financially stressed, with inflation, rising interest rates, and a lack of savings being the top stressors, making it difficult for many workers to contribute to their retirement plans.
Gen Z is more optimistic about homeownership than millennials, with a lower percentage believing it will be impossible in their lifetime, and while both generations face barriers to homeownership such as high home costs and student loan debt, Gen Z is doing a better job of saving and has a slightly higher rate of homeownership compared to millennials and Gen X at their age.
The share of wealth held by people under 40 in the UK has sharply declined, raising concerns about a potential increase in pensioner poverty in the future, as younger generations are already facing financial challenges and are unable to save enough for retirement.
Millennials and Gen Zers are concerned about the financial impact of baby boomers, as they believe the older generations' choices have contributed to their current financial struggles, including high student debt and difficulty affording housing, while boomers hold a majority of the nation's wealth.
Some Americans who live to be 100 or older attribute their longevity to lifestyle factors such as regular exercise, eating fresh, home-cooked meals, staying adventurous, doing activities they love, staying resilient in the face of setbacks, and maintaining a positive mindset, according to interviews conducted by TODAY.com.
Young Americans face unprecedented financial challenges, with rising costs of housing, education, and childcare, as well as limited career advancement opportunities, causing many to believe that attaining the financial stability of previous generations is unattainable.
Millennials who purchased homes and settled in the suburbs during the pandemic will face a financial burden as they will not be eligible for student loan relief, potentially leading to an increase in household bankruptcies, according to former Fed economist Danielle DiMartino Booth.
Millennials are being heavily impacted by higher interest rates, while baby boomers are benefitting from the increased rates by earning 5% on their savings, resulting in a significant wealth disparity between the two generations.
Millennials are being hit harder by elevated mortgage rates than other generations, as they were not able to take advantage of historically low borrowing rates during the pandemic, leading to increased mortgage debt and difficulty in entering the housing market.
Despite financial struggles and economic challenges, a study found that 80% of young Americans between 18 and 34 are optimistic about their financial future, with the majority believing they will be thriving in both five and thirty years. However, these adults face obstacles such as basic expenses and rising inflation, along with a lack of financial support and resources.
Many millennials are nostalgic for the financial freedom they had while working minimum wage jobs in the early 2010s, and a 32-year-old photographer explains that his current financial stress is due to increased credit card and student loan debt, despite making more money and living in a double-income household.
A new analysis from Bank of America shows that Gen Zers and millennials are increasingly taking on gig work to make ends meet, but their credit and debit spending growth is slower than that of baby boomers, indicating that young adults are facing financial constraints and have little discretionary income. This trend is attributed to wage slowdown and rising living costs for younger generations.
Millennials may need to let go of their resentment towards baby boomers in the housing market, as current conditions resemble the 1980s more than the mid-2000s, with factors such as high inflation, rising interest rates, and a surge of millennial buyers contributing to a potential housing recession.
The current housing market is resembling that of the 1980s, with high inflation, rising interest rates, and a boom of homebuyers coming of age, potentially leading to a similar "housing recession" where home sales stay low and prices stagnate; however, demographic changes, such as millennials reaching prime homebuying age, could support home prices despite rising mortgage rates.
Baby boomers have benefited the most from a massive wealth transfer, particularly in the housing market, while millennials are being crushed by high mortgage rates and limited supply.
