To retire at 65, American millennials need to save almost half their paycheck

millenials 19

(Simon Maage, Unsplash)

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Sean Fleming, Senior Writer, Formative Content


  • US millennials are now advised to save much more for retirement than previously suggested – 40% of income, compared to 15% in the past.
  • Many millennials are at risk of having insufficient savings to retire comfortably.
  • If you can’t save more of your income now, make sure you’re investing in your skills and your health so you can continue working and avoid financial hardship.

There’s new advice for US millennials planning to retire at 65: squirrel away 40% of your income over the coming years, if you can.

According to Dr. Olivia S. Mitchell, Professor of Business Economics and Public Policy at the University of Pennsylvania, that’s what you’ll need in savings to live off even just half of your final salary in retirement.

 

And that may come as a shock for the 67% of Americans who told the Employee Benefit Research Institute they were confident they’d be able to retire comfortably.

Past advice advised American workers to put aside around 15% of their annual income and encouraged them to start saving as early as possible.

A worsening outlook for stock markets is one reason why it’s important to save more. While average returns from US stocks have been around 10%, several investment firms quoted by CNBC cautioned future returns may be far lower.

Can’t save? Keep working

Saving almost half your salary is unlikely to be feasible for all but the most well paid, making the dream of retiring at 65 just that – a dream. It may be necessary to rethink your plans and work well into your 60s and even your 70s.

Personal savings rates in the United States, 1960-2018
Image: Statista

This may be all the more urgent given that, as the above chart shows, the proportion of disposable income set aside by Americans (the personal savings rate) has been lower for most of the last 19 years than it was in previous decades.

The prospect of working past a typical retirement age might not fill many hearts with joy, and poor health or a lack of employment opportunities could lead to economic hardship.

Reskilling

In the future world of work, taking time to invest in your own skills, health and mental resilience will be important.

As the employment landscape is reshaped by automation, artificial intelligence, machine learning and other technology-led developments, demand for skills will shift, as outlined in the World Economic Forum’s Future of Jobs report.

Several waves of automation-driven change will make retraining commonplace. But that won’t necessarily make it unsettling. As well as staying physically fit and up-to-speed with in-demand skills, the workforce of the future will need to be emotionally and psychologically resilient, too.

So, if you can’t invest 40% of your income in retirement savings, make sure you’re at least investing in yourself.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Mozambique pledging conference hopes to soften devastating blow of back-to-back cyclones

This billion-dollar campaign wants to protect 30% of the planet by 2030

ILO welcomes new UNDP report that places decent work at the heart of sustainable development

UN rights chief calls for release of hundreds abducted and abused in South Sudan

The future of manufacturing is smart, secure and stable

European Globalisation Adjustment Fund, who gets it and who pays the bill?

4 innovative renewable energy projects powering Europe’s green future

The Europeans with a job diminish dangerously

Civil protection: Parliament strengthens EU disaster response capability

Drinking water: new plans to improve tap water quality and cut plastic litter

Global health challenges require global medical students

Brexit negotiations: back to square one, tougher words, no good faith

After this year’s Climate Action Summit, what happens next?

Parlamentarians to “break up” with reality in the Google antitrust case

3 ways governments and carmakers can keep up with the future of transport

10 things Europe does better than the rest of the world

“If they think they can slave an entire nation, then they will just have the opposite results!”, Alexis Tsipras cries out from the Greek parliament

How can we measure real progress on the Sustainable Development Goals?

Cambodia: Giving back to UN peacekeeping

UN chief condemns terror attack in Kismayo, Somalia

How public private partnerships must evolve to create social impact

Summer 2018 Interim Economic Forecast: Resilient Growth amid increased uncertainty

5 amazing people fighting to save the oceans

Chinese economy to raise speed and help the world grow

Somalia: UN congratulates Puntland region’s newly-elected President

We are close yet so far…

EU Youth Goals – we are shapers not listeners

The Commission unsuccessfully pretends to want curbing of tax evasion

FROM THE FIELD: Stopping aquatic hitchhikers to safeguard environments at sea

New roadmap toward healthier and cleaner oceans adopted by UN Environment and European Commission

5 facts to know about Africa’s powerhouse – Nigeria

Global Citizen-Volunteer Internships

European Defence Fund on track with €525 million for Eurodrone and other joint research and industrial projects

The relation of deforestation and respiratory diseases

Here’s how data can shine a light on financial crime

Why South Africa is on a path of economic renewal

Eurozone has practically entered a deflation trap

EU budget 2019 approved: focus on the young, innovation and migration

Yemen war: The battle rages on, children suffer most

Despite progress towards peace, Afghanistan facing ‘daunting challenges’ ahead of presidential vote

“Asia-Pacific takes stock of ambitious development targets”, written by the Heads of UNFPA and ESCAP

G7 summit: Trump Vs. G6 leaders on trade and climate change

Who will secure Lithuania?

Act now to end violence, Zeid urges Nicaraguan authorities

China is the first non-EU country to invest in Europe’s €315 billion Plan

Intel @ European Business Summit 2014: Better decisions now, the new business dashboard 

New forms of work: deal on measures boosting workers’ rights

Maros Sefcovic Canete European Commission Energy

Better late than never? Commission runs now to fight energy dependency on Russia with the sustainable energy security package

Warmongers ready to chew what is left of social protection spending

How can consumers be effectively protected from insurance sellers?

China and UK relations post Brexit as EU addresses Chinese takeovers

Manipulating privacy and reaping the benefits of technology

South Sudan ‘revitalized’ peace deal must be inclusive, Security Council hears

Conditions deteriorating alarmingly in Yemen, warns senior UN official

Malta: MEPs conclude fact-finding visit to assess Caruana Galizia murder inquiry

Investing in rural women and girls, ‘essential’ for everyone’s future: UN chief

At last Britain considers a super-soft Brexit

Long live Eurozone’s bank supervisor down with the EU budget supremo

Human health – litmus paper for the climate change?

MWC19 Wrap Up, in association with The European Sting, GSMA’s Brussels Media Partner for the 6th Consecutive Year

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s