A plethora of surveys had shown that this generation does not believe that the Social Security system would live long enough for them to collect any retirement benefits. Nevertheless, analysts recommend millennials to take the necessary steps to make sure that they are financially secured when the golden years are just around the corner.
Millennials are risk-averse people so do not expect them to easily engage in investing in anything from a personal car to owning a home rather than renting it. This generation still has a vivid memory of the stock market crash in 2008-2009, while many of its members still struggle with impairing student load debts that are more burdening than the debt of previous generations.
To tackle this issue, employers and lawmakers alike try to enroll millennials into retirement plans by default and hope that they won’t decide to opt out. But not all millennials are employees. Many of them run small startups, while others would rather work as freelancers.
Still, these millennials should also think about their future. According to a recent survey, millennials too are interested in saving. They tend to put aside about 9 percent of their annual income for retirement. This generation doesn’t expect anymore their employers or the government to do that for them.
But they have other ways of making sure they are financially ready when arthritis and dementia kick in.
For instance, experts recommend millennials to raise the stakes, and save 15 percent of their annual income rather then relying on 8 percent. Nevertheless, this could be done if they managed to repay their student loan in time. Personal finance experts explain that most millennials could live 90 to 100 years so they should make sure that they have a good reserve that would last. Other experts suggest it is wise to have a $100,000 reserve for retirement when they hit thirties.
But a retirement account is not enough. They should gather all the necessary advice on how to better invest those money with maximum benefits. You should ask help from financial planners or robo-advisors.
Robo-advisors are more convenient because you need not to rely on a person to get your advice from. The robo-advisors would ask how risk adverse you are and a set of other questions and decide where to invest your money in. Robo-advisors have only one limitation– they cannot provide investment plans for an individual’s 401(k).
All in all, almost all personal finance advisors agree that it is safer and wiser to focus more on saving than hunting bigger returns.
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