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Michael Scott

Michael Scott

Writer, Safehaven.com

Michael Scott majored in International Business at San Francisco State University and University of Economics, Prague. He is now working as a news editor for…

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Millennials Can’t Retire, But They’ll Still Have To Help Their Parents

Millennials

Millennials as young as 23 are already stressing out about retirement, but now they are taking on another element of stress: How to help out with their parents’ retirement.

According to a survey from AgeUp, 68% of Millennials and their immediate successors, Gen-Z, expect to provide financial support to their parents should they outlive their resources.

Yet, almost none is aware of their parents' finances, and none has a clue as to how prepared their parents are for retirement. Something that could hurt their own finances in the future.

Additionally, 80% of Millennials and the preceding generation, Gen-Xers, surveyed agreed that parents and in-laws should be taken into account when thinking about their own long-term financial plans. However, only 37% have already taken any measures to that end.  

The researchers said that the findings confirm one very important thing: The country is facing a looming financial crisis and no one is prepared.  

“As the Baby Boomer generation grows older, the gap between their retirement savings and longevity will increase exponentially – and the financial burden is poised to fall squarely on the shoulders of their adult children,” the report said. 

According to a different survey, this time by TD Ameritrade, some 13% of Americans said they are already supporting a parent, including 19% of Millennials. 

Yet, younger generations are also struggling under the weight of student loan debt, recession, self-funding their own retirements and wage stagnation in the last decade. 

Unfortunately, many Millennials think they’ll be working until they die. A third of Millennials don’t think they’ll ever be able to retire, and a third regret the money they spent on college or home mortgages. 

On average, Millennials start saving for retirement at the age of 24, while Gen-Xers started at age 30, and Baby Boomers—despite all their wisdom—didn’t start until age 35. Despite that, Millennials have less wealth than their parents.

According to a study by MagnifyMoney, back in 1998, the average household aged 20-35 had a net worth of $103,400 compared to an average net worth of $747,600 for a household aged 52-70 years, or 7 times bigger for the older generation.

Fast forward to the present, and the gap has widened to 12x, with the younger generation boasting an average net worth of just $100,800 compared to $1,210,100 for the older generation. 

In other words, baby boomers are actually 3% richer than their cohorts 21 years ago after accounting for inflation. In the same vein, Millennials are 38% poorer than their counterparts historically. 

Millennial finances took a hit in the 2008-2009 financial crisis, and the rising cost of higher education hasn’t helped, either. According to a recent Bank of America survey, 16 percent now have savings of $100,000 or more.

Also, according to the National Institute on Retirement Security, some 66% of Americans between the ages of 21 and 32 have nothing saved for retirement.

It also suggests that 95% of Millennials aren’t saving enough for retirement, and just over one-third participate in employer-sponsored retirement plans. Exacerbating the situation, Millennials also face a higher life expectancy, lower-income replacement from Social Security, and are less likely to have a traditional defined benefit pension.

By Michael Scott for Safehaven.com

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