Will Retirement Even Be Realistic for Gen Z and Millennials? What Experts Say
Historically, retirement involved leaving behind a lifetime of work in your mid-60s, receiving a pension and maybe a wristwatch for your efforts, and slowing down the pace of life to travel, play golf, go fishing and dote on the grandkids in your golden years.
For many millennials and Gen Zers, the concept of an ideal retirement has changed – but so have the odds of them ever realizing their version of the dream retirement, and not for the better.
However, MoneyLion spoke with a trio of experts who believe that retirement is very much within reach for today’s young adults, but only for those who can successfully adapt timeless financial principles to the realities of today’s ever-changing financial landscape.
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Unique Obstacles and an Uncertain Future
For today’s young adults, the path to full retirement is littered with roadblocks that their parents didn’t have to navigate.
“Widespread traditional retirement for millennials and Gen Z is no longer the default outcome,” said Drew Stevens, Ph.D., certified fiduciary and the founder of Wisdom to Wealth, which helps pre-retirees plan and prepare for retirement. “It’s becoming the exception. The financial framework that supported prior generations has fundamentally changed.”
He cited “a convergence of pressures” including elevated housing costs, significant student debt, rising living costs, a lack of traditional pensions and increasing uncertainty surrounding the future of Social Security.
“The responsibility for retirement has shifted almost entirely onto the individual,” he said. “The individuals who succeed will be those who start early, control lifestyle inflation and prioritize financial education. The margin for error is simply much smaller than it was for previous generations.”
‘The Challenges Change; the Principles Don’t’
Nate Willardson, a certified financial planner and managing partner at Currents Wealth Strategies, a financial planning and investment firm serving pre-retirees, understands the headwinds today’s young adults face. However, he also understands that their parents and grandparents contended with difficulties of their own.
“Every generation has its version of this,” said Willardson, citing double-digit mortgage rates in the 1980s and the Great Recession as examples. “The challenges change. The principles don't. Focus on what you can control: your spending, your education, your income.”
Those who manage the variables largely within their control will always be positioned to meet their generation’s challenges better than those who do nothing.
“Even if you fall short, you'll end up miles ahead of those who never tried,” Willardson said. “I wholeheartedly believe retirement is achievable for everyone, but like anything worth having, it requires a vision and a plan.”
Don’t Wallow Over Your Generation’s Drawbacks – Capitalize on Its Advantages
Those who apply 20th-century tactics to overcome 21st-century retirement roadblocks will invariably struggle.
“When I look at the clients I work with in their 20s and 30s, I think retirement is absolutely still on the table for a lot of them,” said Taylor Kovar, CFP and CEO of 11 Financial. “It might not look exactly like what their grandparents had, but that doesn't mean it's out of reach.”
While older generations had the benefits of affordable housing and education, the young have the greatest advantage of all when it comes to saving money – time for compounding to transform small contributions into vast wealth.
“What I see with clients who get ahead of it is that even starting small makes a real difference over time,” he said. “The consistency tends to matter more than the amount, at least in the early years.”
Young adults should also leverage the unique advantages of their time and place, which their parents and grandparents never had.
“Artificial intelligence (AI) and technology are the great equalizers that no generation had before,” Willardson said. “The barriers to starting a business or growing your career have never been lower. Play your hand, don't worry about how the deck is stacked. Estimate what that lifestyle costs annually, multiply by 25 and you have your number.”
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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