Young Workers Want to Retire Early but Aren't Saving
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Young Americans aren't putting their money where their mouth is when it comes to saving for retirement. New research has found that 84 percent of young workers find retirement planning relevant, but just 45 percent said they were currently saving.
Even worse, fewer than 1 in 4 workers between ages 18 and 34 have not saved for retirement at all, despite the fact that 35 percent of respondents said that wanted to retire by age 60. Additionally, just 21 percent of workers said they had planned or thought of how much they would need to retire.
"There is an obvious dichotomy between what young people think about retirement and what they're actually doing to prepare for it," said Tina Di Vito, head of the BMO Retirement Institute, a division of financial services group BMO Financial Group, which conducted the research. "While it's encouraging that young adults appreciate the importance of retirement planning, there's clearly a disconnect between the concept and then putting the tangible pieces in place, such as determining how much money you'll need and starting to save. This is especially concerning given that so many expect to retire before the age."
Education can be a big factor behind improving the number of workers and success of those workers in saving for retirement. In particular, Di Vito said that young workers need to have a financial role model to help them plan for their future. The research supports that finding as 38 percent of workers began saving for retirement as a result of conversations they had with parents or financial role models.
"This group seeks self-guided information, wants to be in control and prefers personalized one-on-one interaction over one-size-fits-all educational events," Di Vito said. "Parents and other influential adults have to foster an environment that will encourage young people to think ahead. Increasing their financial preparedness for retirement will guide them towards positive action despite the challenging and complex financial realities facing them today."
The research was a part of the BMO Retirement Institute report, "Broadening the Approach to Preparing for Retirement."