4 Reasons to Save for Retirement Like a Millennial
“Act your age!” An admonishment usually reserved for young people, but not exclusively. T. Rowe Price recently developed a way for individuals to find determine if they act their retirement savings age. And interestingly, they found that the most retirement-savvy generation may be — of all things — the Millennials!
In a column in Forbes
, Stuart Ritter reports
that the newest generation in the workforce appears to recognize how important saving for retirement is. And he offers four reasons behind this surprising result.
1. Millennials are more likely than Baby Boomers to track expenses and budget:
75% of millennials with access to a 401(k) track expenses carefully, but only 64% of Baby Boomers do so.
2. More millennials than baby boomers have increased their 401(k) savings rate:
40% of Millennials have done so in the last year, but 21% of baby boomers have.
3. Millennials self-identify as savers:
88% of Millennials who contribute to 401(k) plans consider themselves good at living within their means; 74% are more comfortable saving and investing extra money than spending it; two-thirds say they save any way they can.
4. Millennials have far more money in Roth IRAs than in traditional IRAs:
to the tune of eight times more, outstripping their immediate elders, Gen X, which has twice as much money in Roth IRAs than traditional IRAs.
Ritter points out that the temptation to put other priorities ahead of retirement saving knows no generation, and offers some guidelines to help keep that from happening:
- save at least 15% of gross income;
- take advantage of employer matches;
- maintain appropriate equity exposure.