If your millennial kids’ retirement plan is their inheritance, they better think again. Unless you are extremely wealthy, odds are good that you will live long and rich enough to put a dent in those family assets, with health care and life expectancies constantly improving. Since those factors may go double for them – your kids are likely to live and need retirement income for much longer even than you – the retirement savings crisis for millennial’s may far exceed the problems for the baby boomers. Of course, this could not come at a worse time, with both Social Security and Medicare on pace to run out of money well before the millennial’s retire.
The sad truth is that many millennial’s have absolutely nothing saved for retirement, and no plans to start anytime soon. The reasons – or excuses – vary, but most in the end boil down to a live-for-today irresponsibility, or plain poor sense about financial realities.
Here’s some advice to share with the millennial’s in your life:
- Do a retirement calculation using any of the many online tools. Look at how much you’ll need to retire on time, and discuss how you plan to accumulate the needed sum.
- Talk about how Social Security and Medicare are running out of money, and the likelihood that the programs won’t be around for them, at least as we know them now. How will they take responsibility for paying for their long, long lives? Have they seen the “Disco Nana” commercials?
- Talk about the tax advantages of IRAs, 401ks and other retirement plans. If you are in the 25% bracket, you can save $1 and get com pound tax deferred growth, or spend $0.75 and have nothing for later. Which makes more sense?
- Finally, show them about the miracle of compound “interest” (investment returns, really), and run some numbers using an online investment estimator. The results should make their heads spin with greed!
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