13 Ways Millennials and Boomers Differ When It Comes to Retirement Planning
Ready or not, retirement is coming for us all. The game is changing drastically for millennials, but hope for a comfortable future is not lost.
Pension and Social Security funds are less promising than ever, and the ideal boomer retirement age is out the window. More and more, it’s left up to the individual to secure financial stability beyond working age. Without thorough knowledge and preparation, an easy retirement is hard to guarantee.
Generally speaking, retirement benefits are not what they used to be. A lifetime of employment only gets you so far these days, meaning it’s crucial to stay up-to-date on modern security options. No one can predict the weather, but one thing is certain: the retirement landscape is growing more complicated for future generations. Here are some key differences between boomer and millennial retirement outlooks.
Social Security
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Between 1970 and 2023, the number of Social Security beneficiaries has more than doubled. Today 65 million Americans receive benefits from the Social Security program, meaning the individual gets a smaller piece of the pie than ever.
The population shows no sign of decreasing, nor does the strain on America’s national retirement fund. Knowing what to expect is important, so stay up-to-date on the program’s payouts.
Salary
On paper, millennials are making unprecedented money. At every level of employment, the median millennial salary is higher than its boomer counterpart. While pay has steadily increased, it fails to keep up with staggering inflation rates. Good news: over the past 30 years, the median salary has tripled.
Bad news: food and housing costs have outpaced the growth of wages. Even with an apparent raise in pay, it takes a lot of hard work for millennials to keep up with the cost of living.
Lending Rates
Along with the cost of living, lending rates have recently spiked. As of June 2024, the average 30-year fixed-rate mortgage comes with 6.87% interest. While this number is relatively low in the long run, it’s up from 2.96% in 2021.
Personal loan interest rates are also significantly higher over the past three years, climbing from an average of 9.5% to 12.5%. Unfortunately, we can expect these lending trends to continue across the board.
Automation
Millennials and boomers alike are experiencing new job loss due to automation. Factory production, farming, and other large-scale industries have steadily incorporated machine labor, leaving many American workers jobless and obsolete.
The rise of artificial intelligence complicates matters further, threatening jobs in the customer service industry, the visual arts, and beyond.
Property Value
Property value is soaring across the globe. The sooner you enter the market, the more potential your investment has. In a world of high taxes and endless monthly fees, owning commercial or residential property is a tremendous leg up. Maintaining owned property is no small task, but it ensures a physical, secure investment.
Like the greatest generation, millennials must maximize real estate assets via rental, new construction, and other commercial means.
Investment Returns
Long-term investments like basic savings and CD accounts no longer perform like they used to. Boomers have enjoyed decades of low-risk investment with relatively high returns.
In 2024, a certificate of deposit yields a 1.86% APR. Compare that to rates as high as 9% in the 1980s, and it’s no wonder why millennials are turning to riskier investments.
Crypto Currency
One area in which millennials have the upper hand is the crypto market. Bitcoin and other cryptocurrencies have been publicly available since 2009, opening up a new frontier of investment opportunities.
New forms of code-based stock are created and traded daily, creating overnight wealth for the smart investor. Playing the crypto market takes active monitoring and considerable know-how, but the potential rewards are high.
Gig Economy
Given diminishing returns from classic retirement payouts, millennials have taken to work in the gig economy. Due to high overhead and strain on corporate benefit programs, many employers are cutting back on full-time jobs.
Certain health and retirement benefits are out of the question for many American workers, meaning second and third sources of income are a must.
Student Loans
Here’s a concept foreign to the average boomer: student loans. Millennials are the first generation to bear the cross of widespread education debt. In 1970, the annual cost of a full year’s tuition at a public, in-state, 4-year college was $578.
In 2024, the same education costs a whopping $11,260. Throw in housing expenses, and most students end up with a hefty pile of student loans that must be settled before a comfortable retirement.
Single Life
Millennials the world over are choosing not to pursue conventional marriage. In the face of retirement, however, singleness has its drawbacks. Today most married couples consist of two earning partners. The basic benefit of two incomes is easy to see, but there’s more to it than extra paychecks.
Married couples and families have different insurance options and often receive tax breaks that unpartnered applicants do not. Missing out on a lifetime of pooled resources will certainly affect some millennials’ retirement outlooks
Medical Expenses
As retirement approaches, so does an uptick in doctor visits. Millennials and boomers alike can look forward to tremendous hikes in the healthcare industry.
An uninsured emergency room visit costs upward of $2,000. Martin Shkreli sells insulin for $750 a dose. Times are tough already. Routine care, medication, and end-of-life services add up to a major chunk of retirement savings.
Funeral Costs
Ironically, one of life’s greatest expenses is dying. Funeral costs have never been cheap, but the burden of baseline services has become extreme. The median cost of a basic funeral with viewing and burial is $8,300.
This number doesn’t include the price of a burial plot, ranging from $2,000 to $50,000. Depending on location and family tradition, the funeral process is quite pricey. Planning for these post-retirement expenses can save your loved ones a costly headache.
Hobbies
Most importantly, retirement planning is about fun and games. The whole point of retirement is to enjoy the fruits of your hard labor. It’s important not to lose sight of your favorite pastimes on the road to retirement.
Remember to play hard between work and keep up with the activities you love. You’ll have nothing but time when retirement finally comes your way!
