Why Millennials Are Quietly Giving Up on Traditional Retirement
A growing number of millennials aren’t expecting to retire in the traditional sense at all. Between expensive housing, student loans, inflation and fears about future costs, many younger workers now assume they’ll work longer, semi-retire gradually or keep earning income indefinitely just to stay financially stable.
Financial experts laid out why many millennials feel this way and explored whether their fears are founded.
Check Out: I’m a Financial Advisor -- Here’s How Often You Should Check Your Retirement Account Balance
Read More: Start Growing Your Net Worth With Smarter Tracking
Why Millennials No Longer Believe Traditional Retirement Is Feasible
There’s a widening gap between retirement expectations and economic reality for millennials. Kenneth Vern Bolam, president and founder at First Financial, shared that millennials’ formative years “have coincided with economic recessions and rapidly rising housing costs and ... changes in the labor market brought about by automation.”
This makes them feel less sure that they'll ever be able to afford traditional retirement. In fact, more millennials expect retirement to include “working into their 70s, with part-time jobs or consulting work, rather than completely stopping work at age 65,” Bolam said.
Housing Costs, Inflation and More
Millennials are nothing if not detail-focused, and they can do the economic math, said Andrew Gosselin, a certified public accountant (CPA) at Save My Cent.
“Housing costs, healthcare costs, childcare costs and educational costs continue to grow at a faster rate than wages in many communities,” he said.
These competing economic pressures are preventing many millennials from consistently saving for retirement during their prime earning years.
“Millennials devote a larger share of their earnings to basic expenses compared with earlier generations at the same age,” Bolam said.
They’re looking back at their parents and grandparents, Gosselin pointed out, who historically were able “to purchase a house early, establish low housing costs and create equity through that asset over an extended period.” Unfortunately, many millennials don’t see those same conditions in their lifetime.
In a nutshell, according to Chad Silver, founder and CEO of Silver Tax Group, “The classic retirement system was based on economic conditions that no longer hold true.”
Check Out: Enter for a Chance To Win $500 in MoneyLion's Summer Break Giveaway (No pur. nec. Ends 7/4/26. See Official Rules at mlion.info/summerbreakofficialrules)
The Hidden Cost of Delaying Retirement Savings
While it’s understandable that millennials are focused on just getting by, Bolam warned that delaying investing in retirement accounts and otherwise “can end up costing borrowers more than the debt itself by reducing the amount of time left for investments to compound.”
Silver concurred, adding that “each year that you delay starting a retirement account is one year of tax-free growth that you forfeit.”
Millennials Are Redefining Retirement
Millennials aren’t abandoning retirement altogether, but they are “rethinking what they mean by retirement,” Gosselin said.
While many continue to imagine themselves retiring completely from employment, he said, “others envision a more gradual transition including flexible hours, consulting and/or continuing to receive income after retirement.”
There’s also concern about Social Security, Bolam said.
“Even if Social Security remains available, many young workers are skeptical that it will provide enough funding for them to retire comfortably,” Bolam explained.
Small Decisions Matter
While the experts understand why millennials feel discouraged, they stressed that small financial decisions still matter enormously over time. Even a tiny monthly sum put toward retirement can compound significantly over time.
Summer spending adds up fast. Enter MoneyLion's Summer Break Giveaway for a chance to win $500 — and give your budget a break. (No pur. nec. Ends 7/4/26. See Official Rules at mlion.info/summerbreakofficialrules)
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
More From MoneyLion:
