For those who were born somewhere between 1980 and 2000, more commonly known as millennials, the pressure to go to college right after high school left many with significant student loans, and those who graduated college in 2008 had an even harder time finding a decent paying job, leaving many with a small income and a high amount of debt. This is only part of the reason why Generation Y is having a hard time with financial planning and saving. If you’re in a similar situation and want advice about retirement planning or saving for the future, contact a financial advisor today.
They Take Jobs That Don’t Offer Retirement Plans
Small business is all the rage recently and while they may offer a wide growth opportunity, their budgets may not allow for 401(k) plans. Young adults may not realize how essential these plans are to their future. Millennials are also frequently changing jobs in order to find the highest pay, the best location, or one that suits that skills. These are, of course, great things to look for, but retirement benefits may not be a priority. Also, millennials may not realize that certain industries are also more likely to offer retirement benefits than others.
They Aren’t Eligible For 401(k) Plans
If young adults do find a job that offers a retirement plan, there may be a waiting period before they can enroll or become eligible. Whatever sized company or industry millennials find a job in, being young and new is a slight risk for the employer. Waiting three months or putting in 1000 hours of work before being able to enroll gives the employer a little more security in knowing that the employee is less likely to leave and will be more willing to let them participate in employee matching 401(k) programs.
Many millennials are now planning weddings, vacations, buying homes, or raising children. This additional financial burden, on top of existing student loans or car payments, makes it that much harder to put aside money for retirement. The current financial needs become more important than future financial security.
Those who have higher incomes are more likely to participate in a retirement plan such as a 401(k). Those who are trying to make it work with a lower income, less than $50,000, have a harder time setting aside money each month. Millennials may think that putting away $30 each month won’t make a big difference in the end, so they forego the savings. Few know how important starting to save early is, even a small amount each month.
Getting into the saving mindset can be a challenge and there are many other things to worry about for men and women in this age group. The important thing to keep in mind is that even if you can put aside $20 to $50 each month in a retirement account, the growth will pay off in the long run. When employers don’t offer 401(k) plans, there are other options to consider. For financial advice and guidance on retirement planning, consult with a professional financial advisor. KNR Consulting has your best interests at heart.