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Why Millennials May Never Retire – And Why It May Not Matter

There’s serious concern out there that members of the Millennium Generation may never be able to retire. The concern is already there in regard to the Baby Boom Generation – as many in that group won’t be able retire either. But a host of factors are conspiring, making it clear why Millennials may never retire at all:

  • Outsized student loan debts.
  • Constrained career options and incomes.
  • Reduced ability to own their own homes.
  • Doubt over job promotions as Baby Boomers remain in the workforce.
  • Lower retirement savings due to all of the above.
  • Predictable reductions in pensions and Social Security benefits.
  • Rising healthcare costs, particularly higher insurance premiums for young people under Obamacare.

It looks as if the long predicted “generational warfare” may become a reality, at least as a metaphor for future economic imbalances between the generations.

Why Millennials May Never Retire - And Why It May Not Matter

Why Millennials May Never Retire – And Why It May Not Matter

A report that appeared on NerdWallet last fall concluded that 73 will be the new retirement age for Millennials That will be particularly hard on the male members of the generation, considering that the average life expectancy for men in the US is only around 76.

Will that turn out to be the case? What can be done to change the outcome to a more favorable one? Or does it even matter?

Let’s look past the gloom and doom of the experts, and approach Millennial retirement from a different angle. It may not be as bad as we’re being told. And even if it is, you can decide not to participate in the mess. After all, it’s your life, and you don’t have to be a victim.

Save more than you ever thought you could

There is a major step that you can take in the right direction, and that’s to return to the practice of prioritizing saving that typified the World War II generation, and the generations before it.

Because of 401(k) plans and the increasing generosity of Social Security, people who have retired since World War II were often able to do so with only minimal savings during their lifetimes. That was not the case for generations before World War II, and almost certainly won’t be in the future.

Embrace saving money as a lifestyle choice. This will be the most significant decision that you will make, because it will affect virtually all areas of your finances. By prioritizing saving, you will be forced to find ways to live on less, as well as to consider the most beneficial ways to invest the money that you do save.

Forget about conventional ideas of saving 10% of your income. You’ll need to think more in terms of 20%, 30% or even more. And this isn’t just about retirement either – a large bankroll will minimize the impact of any crisis that you will face in your life.

Don’t add any more debt, and if you do, make it short term

Millennials have the dubious distinction of being the most indebted group of young people in American history. If you’re in debt now, that is a circumstance of your life, particularly as it relates to student loan debts.

It’s important that you not only concentrate on paying off the debt that you have, but that you also avoid taking on any new loans. Adding anymore debt to existing debt will simply put you in a deeper hole.

This will mean that you’ll need to say “no” to yourself and to others more often than you’re comfortable doing. The only way to avoid taking on new debt, is to stop buying things you can’t afford.

That may mean buying a used car – even a very old one – versus a brand-new one. It may mean that you will spend much of your life renting rather than owning a home. It might also mean eating most of your meals at home, buying much of your clothing in thrift stores, and forgoing all but the most frugal vacations.

The better that you are at this early in life, the more quickly you will attain some level of prosperity that will provide more spending options. In the meantime, the preferred mind set is to lower your expectations – which is our next subject.

Lower your expectations

Youth and optimism go together like bees and honey. It’s natural to want better things in life, and even to expect them as you get older. But high expectations can clash with reality, particularly if that reality isn’t as robust as it once was.

People think that it is pessimistic to view the glass as half-empty. I get that point, but dealing with reality on its own terms is far more constructive. If the glass really is half-empty, you’re better off to accept that and deal with it as it is.

That never means that you give up trying, only that you lower your expectations to a level that is more favorable to making progress in an environment of reduced opportunities.

Ditch the idea that you’ll be earning six figures in a corner office job by the time you’re 30. Forget about owning a McMansion – you don’t need one anyway. And buying a new car every five years is pure waste.

Many of the trappings of the good life that people aspire to are not even necessary to have a good life. Concentrate on living an interesting and enjoyable life, and keeping company with similar people. Work to create rich experiences, and in doing work that fits your personality and abilities.

Most of us have an innate need to do some kind of work that will “make a difference”, and that’s well worth pursuing. Unfortunately, the pursuit of money often squashes that effort. Don’t let it happen. The work that you do will have an important impact on your happiness in life, apart from financial concerns. No matter what your education is, consider self-employment, particularly if job opportunities are limited.

The world – and your life – won’t collapse because you can’t retire in comfort

What’s often forgotten in any discussion of retirement planning is that the entire concept of retirement is relatively new. Before World War II, only rich people retired. The idea that the average person can retire only caught fire after the war, as Social Security, and later Medicare, spread, and as the postwar boom enabled employers to offer generous pension plans even to blue-collar workers.

But here’s the thing – very few average people ever retired before World War II. And many of them lived interesting, satisfying, and meaningful lives anyway. No matter how things turn out in your life from a financial perspective, you can do the same.

It might even be fair to say that the world is reverting to the historical norm as far as retirement is concerned. We may all – Baby Boomers too – have to confront the reality that a comfortable, full-time retirement to the tropics by ordinary people may be slipping into the dustbin of history.

And if that is true, the world won’t collapse. Neither will your life go into a sinkhole. Again, it gets back to making a conscious choice to live a meaningful life, even if there are serious financial constraints. It’s entirely possible to do that, but it may require looking past the mainstream media and all of its preferred advice.

Success in life is finding that place that works for you – not following the herd to somewhere that the experts say we all “need to be”.

There are different ways to “retire”

Yours won’t be your “father’s retirement”, but it doesn’t need to be either. Back before World War II, and even in the years immediately following it, older people still moved into some state of existence that looked an awful lot like retirement. Maybe they didn’t quit their jobs or sell their businesses, but they definitely slowed down and reduced their hours and workloads.

Some moved in with family and took on more domestic roles. In fact one common method of retirement was to move in with your children – who maintained the basic costs of the household – while you provided child care, household management, and home repairs. Often, you would maintain a business or farm, which would be passed on to one or more of your children, enabling them to earn a living and you have a place to live for the rest of your life at minimal cost.

We can’t do exactly that today because the structure of society has changed substantially. But at the same time we don’t have to use standard definitions of full-time, permanent retirement as our life choices either.

Creating a retirement that works for you

It’s often said that necessity is the mother of invention; it’s also the mother of lifestyle choices.

Even if you can’t afford traditional retirement, there are ways that you can set up a “soft retirement” that may work just as well. For example, you can transition from a full-time job into your own business. It can be a full-time business or a part-time one, depending upon how much income you need.

Despite all that the doom and gloom crowd say, Social Security will be there when you retire – it will have to be as a matter of social order and continuity. Between Social Security and whatever income you can earn, you can also  live at least a comfortable semi-retirement. And that may be all that you need.

What if you like the work that you’re doing when you’re 65, or 67, or 70, or even 75? Should you quit and retire because someone else said that you should?

The entire concept of retirement excludes the importance of work in our lives. Work gives our lives meaning, and a sense of belonging to the greater community. It also keeps us busy. Would you really be happy without all of that?

I’ve known many people who work their entire lives, as in right up until just before they die. The notion that your life will be in a state of major crisis if you can’t retire by the time you’re 65 is way overblown. But we also have to consider that there is no small number of people out there have built their entire careers in the retirement industry. We should expect to hear nothing less from them.

But as should be the case throughout our lives, we should also be fully prepared to live our retirement years by our own definitions, and never by those of others.

Are you worried that you may never be able to retire? If you are, what are you doing to deal with that possibility?

( Photo by SalFalko )


8 Responses to Why Millennials May Never Retire – And Why It May Not Matter

  1. Well said Kevin, from the fact that Millenials need to change their thinking and expectations in life, to the fact that retirement at 65 is a fairly new idea and one that we don’t need to be tied to. It is my dream to work in ministry until my life is over, or I am physically unable. We are working hard to get out of debt (and yes, student loans!)so that we can spend our time and energy in areas that are our passion.

  2. Hi Sherrian – That’s a plan with an eternal purpose! I think that’s how we all need to think about the traditional retirement years – not how much money we’ll have (because maybe it won’t happen), but what kind of life do we want to live. Lifestyles aren’t all about money, often it’s about how little you’re prepared to live on. And if you’re going into the ministry, somehow God will provide for you, even if you can’t see how right now. Personally, I think getting out of debt is a huge step forward by itself.

  3. Good points! The way I see it, there are two basic strategies: You can work longer at your existing job or you can create a job for yourself that you can retire into.

    The most important thing is to not spend your entire working life in pursuit of some kind of future ‘good life’ because when you get to the end of the road you will probably find that the ‘good life’ had already passed you by while you were busy working for the future.

  4. Well put Chaz – I think we need to seek balance throughout life, and not plan to backload everything into retirement as though that will be the pot of gold at the end of the rainbow. Building a meaningful life now is more important, because it sets you up to live a “good life” from now on. When you put a price tag on that life – as if it can be bought – you set yourself up for a monetary Catch-22, and you can never win.

  5. John Richards says:

    While I definitely am saving and investing for the future, I honestly cannot imagine why anyone would even want to retire. It sounds sort of awful to have nowhere to go and nothing to do. I think there’s a good reason that most rich people who have built successful careers generally do not plan to retire.

  6. Hi John – That’s a legitimate observation about rich people, they generally don’t retire, at least not rich business owners. I think retirement is mostly an exit strategy for people who are dissatisfied about their work. But you can always change the work you do, and if you like it, retirement won’t seem like a necessity. All of life can be an adventure, but we have to make it that way. Having a generous amount of savings helps with that, not just in old age, but throughout life.

  7. Jim says:

    Love this one Kevin, this is why it is so important to find something you enjoy doing, that you can see the potential to make an income in the future, and work at it on the side. Keep your day job, until it can be replaced and once it can, pour your heart into it. I don’t ever plan to retire, just hope to be able to work on my terms-someday!

  8. Hi Jim – Working “on my terms” is what it should all be about. We all have a purpose in life, and when we retire we deny that to ourselves and the world. If you could work on your own terms the need to retire would go away. I think we all need to be very diliberate in finding and developing our best work, rather than tooling along to pay the bills in the hope of one day retiring. So many people are afraid to pursue their passions, or even to find out what they are. But anyone can do it as a side venture, and with little risk at that.

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