I’m going to share a scary statistic with you today, but before I do, just remember: don’t panic! The rest of this post is going to cover some actionable steps you can take to ensure you avoid this situation. Ready for it? According to a recent NerdWallet article, members of Generation Y are likely facing a long, long work road ahead of them. Thanks mostly to the amount of debt the average millennial carries, the retirement age for our generation is predicted to be 73. Yikes!
Did you manage not to panic while reading that? No worries if you did, because I’m here to reassure you and provide you with a few tips to plan for the retirement you want.
It’s Not as Bad as It Sounds
73 sounds like an extremely old age to retire at, but we have to remember that our golden years are likely to look much different than what our grandparents, and even our parents, have experienced. With improved healthcare (and more access to it) and a better understanding of how to take care of ourselves, we’re likely to live much longer than generations before us – and logically, that means our working years will be longer, too.
Our Tendency for Entrepreneurship Makes Millennials Different
Millennials are likely to be active, engaged members of society and the workforce into our sixties and maybe seventies, and many of us will do that by choice if we maintain our good health. We might work part-time positions or continue the freelance work we’ve done for years. This involves phasing into retirement or a new career, as opposed to quitting a job we’ve had for 40 years and collecting a pension.
Our generation is uniquely adapted to and skilled at switching jobs and taking on new careers and challenges. It’s likely that our love of side hustles and our entrepreneurial spirit won’t die with age, and the kind of work and career experience we have will be incredibly different than what our parents experienced. I recently saw this infographic on Why Millennials are Snubbing the Corporate World for Entrepreneurship and I couldn’t agree more.
We’re likely to be able to slowly move ourselves out of work as we age by switching to jobs that may pay less than our previous careers, but are ones we truly enjoy doing. At that point, we may indeed be 73 before we fully retire – but it won’t be a negative thing. It will still be on our terms.
However, I think we need to change the conversation from “retirement” to “financial independence” so that you don’t NEED to work until your 73 and instead can choose to. Also, many people retire when they can’t work anymore, which in cases of disability, can come quicker than we think.
Contribute to Your Retirement Accounts
Let the magic of compound interest over time work for you, and start saving early. Utilize the investment options available to you and contribute as much as possible to retirement accounts. Add to anything your employer offers you by opening your own Individual Retirement Account, or IRA.
Speaking of your employer, be sure you’re taking full advantage of employer-sponsored accounts like a 401(k) or a Simple IRA. If your company offers a match, then there’s free money on the table for you – take it! Contribute at least enough to get the full match (if your company will match 5%, then you should contribute at least 5%). Also, don’t forget to maximize your company benefits.
Make More Money Now
In addition to saving more, you can also take action by earning more. Monetize a current hobby (like crafting or refurbishing furniture) or hustle to pick up work on the side as a freelancer. If you’re currently employed, you probably have a skill that you can turn into part time work! Consider how a raise at your current company would impact your 401(k) contributions for years to come!
You don’t have to retire at 73 if you don’t have to – or you may find that you are still lovin’ life and work at that age because you’ve found your place in a job you really enjoy. The beauty of planning now is that it allows you the freedom to choose. Making sure you’ll be set later means you’re creating the freedom to do what you want. You get to craft your perfect version of retirement. What does financial security mean to you?