SOURCE: wallpapermade.com
As if Generation Y, or the Millennials, didn’t have enough stress and financial tension going on in their lives, the latest projections from financial professionals predict that you will need at least a cool $2 million or so by the time you get ready to retire. Recent estimates are that if you are an older GenYer, born in the early 1980’s or so, you will need anywhere between $1.8 million and $2 million if you want to retire in relative financial and economic safety. For the far end of this generational spectrum, those born toward the end of the 1990’s, you are going to need close to $3 million before you can quit working.
Way too early to even be thinking about that, you say? Well that’s what many from generations before you had said and they are now scrambling and working until they are 80 years old. If they’re not living in the shed in their daughter’s back yard.The tremendous challenge with this scenario, however, is inflation. The Federal Reserve claims the current inflation rate is 2% which eats away at savings like moths let loose in a clothes closet.
This is on top of you having to earn nearly $40,000 a year and socking away a decent percentage of it. Once the older Gen Yers get to retirement age, in say 30 years or so, $1 million at a 2% inflation rate will only be worth around $530,000. For the younger end of this generation, when you want to quit in about 48 years or so, that $1 million will only be worth about $390,000.
So, or the most part, the game has barely begun for this generation and they are already trailing by two touchdowns. The world is not even close to how it was for your parents and, certainly, for your grandparents. There is no such thing as a pension in the private sector anymore. The best you will seem to be able to do is a 401K and many financial schools of thought are not all that thrilled with those either. Also, Social Security may not even be around anymore by then and Gen Y is expected to live longer than any generation that has come before it.
So what’s the score right now? Well, Gen Y is a bit behind but it isn’t hopeless. The older Yer’s will have to save at least $2,000 a month for the next 32 years to end up with $1.8 million in the end. That tends to assume you can get at least 5% on your future investments. You younger Millennials with about 48 more years to work; if you can start saving $1000 a month, right now, you will end up with around $2.4 million by the time your retirement comes.