5 Reasons Millennials Struggle to Save for Retirement

Early retirement planning represents a major key to long-term financial success. But whether due to a lack of interest or a lack of ability, many Millennials struggle to put together a retirement plan at this time. This generation faces a number of unique challenges, including…

Housing costs are high. Housing is the number one monthly bill for most people, and housing costs remain especially high lately. It can be difficult to prioritize saving for a down payment on a home, or keeping the mortgage paid while also saving for retirement. But building equity in a home can also be helpful toward a long-term financial plan, because we all still need a place to live in retirement. It’s not a choice of one or the other, but how we can accomplish the goal of homeownership alongside retirement savings.

Student loan payments. The average student loan balance in the US is over $32,000, but many Millennials say their paychecks don’t reflect the investment made in education. Options like forbearance and deferments do exist, but are not available to every borrower. And of course, interest must be paid or it will continue to increase the overall balance.

High credit card debt. The average Millennial carries over $27,000 in credit card debt, according to Experian. Credit card payments can eat up a significant portion of a monthly budget. This type of debt is particularly difficult to eradicate, and often a debt consolidation loan along with a strict budget are the only solutions.

Healthcare costs. Healthcare is costly for everyone now, but Millennials tend to bet on good health. Enrolling in a low-premium, high-deductible healthcare plan can seem like a wise choice, until a sudden accident or serious illness occurs. Those who choose these healthcare plans should consider a health savings plan too, so that they can set aside pre-tax dollars for unexpected medical bills.

Cashing out early. When a financial crisis hits, the temptation to dip into retirement savings can feel intense. But because early withdrawals can cost the investor a lifetime of compound interest, it is almost always better to identify other ways to generate income or reduce expenses.

If you’re a Millennial struggling to save for retirement, call us to schedule an appointment so that we can discuss your options. Even with a tight budget and plenty of other obligations, it is always better to get started on retirement planning as early as possible.