We cherish the promise of the American Dream. We're taught that if we work hard and invest wisely, we'll be able to retire comfortably. And with child-like optimism, we plug on until we're 65. Yet, the numbers just don't add up. The reality: as hard as we work, 92% of working households still won't meet conservative retirement savings targets for their age and income. Even worse, with the loss of pensions, our current system (social security) to help ensure financial stability might not be here for our younger generation (Millennials).
What's Standing In The Way Of Millennials' Financial Dreams
As the largest generation in the U.S. workforce, Millennials are facing real challenges (some out of their control) that will inhibit their ability to maintain the same quality of life they have today when they reach retirement. In a recent study, we found that 40% of Millennials haven't opened a single retirement savings account. And, 73% don't know their net worth. Why does this matter?
Aside from the obvious (time is your biggest asset when it comes to planning for retirement!) – these two factors are critical for taking control of your financial life, whether you're making a retirement plan, paying off student debt, planning for a family or any other financial priority. They're also important for figuring out how much risk you can take on to protect yourself from unforeseen expenses or financial emergencies.
The Road To Retirement
With the average projected savings needed to retire comfortably hitting at least $1 million, far too many Millennials are already staggeringly behind. Cost of living is no joke in many of the big cities that Millennials flock to these days, yet according to our data, some Millennials are hoping to work for just 15 years. That amounts to nominal retirement savings at best, even if they're maxing out their 401k contributions. To supplement the rest of their income in retirement, many are banking on living on inheritances without having a backup plan. On top of that, a scary number would pull out money from their retirement savings early to pay for big purchases like a car or wedding. We have an obligation to stop complaining about the shaky state of retirement readiness and help this generation live more stable financial lives. Because when they gamble with their retirement future, the American Dream ceases to exist.
From our research, we've found that the future of millennial retirement readiness depends on transparency – from quick mobile access to financial accounts, to support from trusted financial experts. In fact, Millennials are demanding better access to their retirement plans – 94% want mobile access to their retirement accounts. And, Millennials are twice as likely as people age 45 and older to say they'd check their retirement savings account daily if they could access it on their mobile device.
If we meet Millennials where they are, there is hope. I've invested my career in companies with the mission to make it easier for people to understand and manage their financial lives. I've seen that when people have the ability to interact with their finances, at their fingertips, they make smarter financial decisions – both short and long-term. We need to keep creating technology and fueling innovation that will meet the specific needs of the Millennial generation. Mobile banking led the way for everyday financial literacy. Soon, mobile retirement planning, coupled with broader access to financial advisors, will (and should) be the norm. Every day we're getting one step closer.