3 Alternative Retirement Paths Younger Generations Should Consider
As currently projected, the Social Security Administration will be able to pay out full benefits to recipients only until approximately 2033.
While that is likely less a concern for baby boomers, younger generations definitely have reason to worry that Social Security will not be able to augment their retirement plans.
In fact, a recent study from Fidelity Investments has found that while 76% of polled boomers lean on Social Security as one of their top three retirement resources, 44% of Gen Z, 48% of millennials and 58% of Gen X plan to rely more on workplace retirement plans instead.
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“The reality is younger generations are redefining retirement because they want control of their money and future,” Linda Jensen, founder of Heart Financial Group, recently told MoneyLion. “Retirement is no longer a definite hard stop at 65, but rather a flexible milestone and a time where people can mix up part-time work, entrepreneurship and passion-projects to build various income streams. … Retirement this way reduces 100% reliance on a pension and opens up options. ”
This all raises the question: What alternative retirement paths should younger generations consider, now that Social Security is no longer an absolute?
Work Longer, Retire Shorter
Insurance and finance expert Melanie Musson said, “Some younger generations are planning to work into later years. That way, when they reach the regular retirement age, they can keep working and focus on building the retirement savings they neglected earlier.”
By shortening their retirement and extending their employment years, Musson said, younger generations will “have to depend on their assets for fewer years, so they won’t need as much.”
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Use the Real Estate Market To Generate Passive Income (and Savings)
Musson said another retirement income stream younger generations are looking into is real estate.
“Some people make it a goal to never sell a property,” she said. “So, if they upgrade their first house, they keep it as a rental and live in their second house. Then, they move to a third house but keep their first and second as rental properties.”
Owning property — and collecting rent on them — can significantly increase a person’s retirement savings, as well as access to immediate cash.
Take Advantage of Modern Changes to the American Workforce
Digital storefronts and working remotely are among the new ways younger generations can build a financial foundation. Musson pointed out that many are taking advantage of these alternative income streams for their retirement savings.
She noted that “some are building multiple income streams through digital products”: Etsy stores, writing e-books and teaching online courses.
Others are choosing remote side gigs from which all income goes to retirement savings. Not only that, but remote side hustles can be continued after you retire. As Musson said, “If you’re able to find a remote job, you can build your schedule, work as you need to earn money and still prioritize a retirement lifestyle with travel and doing the things you want.”
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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