Millennials’ Retirement: Create a Sense of Urgency Today
November 11, 2013Back in October, I took a fun little road trip with my dad and my son to Atlanta to see some postseason baseball action. I love baseball and have been a Braves fan since childhood, enduring many peaks and valleys. Although I try to see at least a couple of games in person each year, this game was special since it was the first playoff game my father and my 4-year old son had ever seen. (My father had also overcome some serious health issues over the past year so it was a blast doing the tomahawk chop together and trying to catch batting practice home runs.)
It was also exciting being at a baseball game that mattered. While the Bravos did win the game, it was their only win of the series (I humbly admit defeat to my co-workers out in LA. Still, I enjoyed the sense of urgency that was evident in the expressions and actions of both the fans and the players on the field. You don’t necessarily get that during a seemingly never ending 162 game baseball schedule.)
In the retirement planning arena ,many Baby Boomers are feeling similar pressure where every little move matters. But it’s the younger generations that aren’t feeling that post-season pressure and perhaps they could benefit from a greater sense of urgency in their retirement planning. We’ve focused a lot in recent months on the challenges faced by Millennials and for good reason. This generation will likely be impacted the most by reduced pension access, longevity, and student loan debt.
When it comes to planning for retirement goals that have a time frame of 30 years or more, it’s kind of difficult to drum up that sense of excitement and urgency you might feel at an October baseball game. Sometimes it seems like preparing for long term goals such as retirement lacks that sense of urgency until we reach a 5-10 year window. By the time retirement is that close, we lose the benefit of time to allow for greater savings and compounding interest to help increase the retirement nest that will empower a strong sense of financial freedom.
When I facilitate our late career retirement planning workshops, I often ask participants what the biggest obstacles are on their path to retirement. As you can imagine, rising health care costs, outliving their wealth, taxes and inflation tend to be some of the most popular responses. But perhaps the biggest obstacle that I’m hearing from others lately is that they got off to a late start planning for retirement.
Along those lines, Fidelity notes that Millennials aren’t saving the recommended 10-15% of their income. So what can the Millennials or Generation Yers do to take control of their financial future? In my opinion, the first step starts with awareness. Take time to create a personal spending plan and monitoring net worth with an emphasis on reducing problematic debt such as student loans. Then it’s essential to run a basic retirement calculation just to assess ways to reach a goal like retirement that may seem like a moving target at this point.
The main thing is to create a sense of urgency to take these important financial planning steps today. It’s human nature to ramp up our financial planning efforts as we get closer to important milestones. However, we shouldn’t wait until we start to feel the pressure.
In particular, Millennials need to start feeling that “edge of your seat” sense of nervousness that many baseball players and fans feel during October. Then, hopefully when they reach retirement, they won’t be left with that empty feeling of agony and despair that I’ve felt as a Bravos fan every season since 1995. At least this year, I had the chance to share the experience with both father (PaPa) and son (Bear).