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Why Millenials Need To Re-Think Everthing They Know About Saving Money

Why Millennials Need To Re-Think Everything They Know About, Saving Money Millennials are more concerned about their financial future than past generations, yet more than half are living paycheck to paycheck, saving little to no money for their eventual retirement. Here's what today's millennials need to know about saving so that they can retire comfortably before old age hits. .0000 New Messages Millennials and Money There are 80 million A millennial is considered born between 1980 and 1999. Millennials in the U.S. That's more than the entire Western region population. Millennials represent somewhere around $200 billion of direct purchasing power and $500 billion indirect. 53% of millennials report thinking about their financial future daily, compared to 40% of baby boomers. Despite being more aware of their financial future than the baby- boomers, millennials who are trying to save money find themselves financially sidelined by one major issue: DEBT. DEBT 4 out of 10 millennials report being "overwhelmed" by one or more debt obligations. 47% of millennials are using more than half of their monthly income to pay off various types of debt. 56% of millennials report that they live paycheck to paycheck and are generally unable to save much if at all. 23% of baby boomers report they live paycheck to paycheck. 56% of millennials have paid for their education through student loans versus 32% of baby boomers. 66% of millennials believe that their education was worth the cost. REASONS FOR NOT SAVING 84% 81% reported other more immediate priorities. 77% reported the need to pay off debts. reported that they did not have enough money to begin saving. Savings Statistics In The U.S. Average savings account balance Average amount saved for retirement Average American household debt $3800 $35,000 $117,951 Average amount owed on home mortgage Average annual household Income Average credit card debt $95,000 $43,000 $2200 40% of working Americans are not currently saving for retirement. 25% of American families have no savings at all. 18% of Americans report being "very confident" about having enough money for retirement. 67% of Americans have less than six months' worth of expenses saved, the recommended amount. For millennials ready to start saving for the future, the first piece of advice is simple: just get started. From there, however, it gets a little more intricate. SAVING FOR THE FUTURE 61% of millennial men have begun to save. 50% of millennial women have begun to save. - TYPES OF SAVINGS ACCOUNTS - The most common savings accounts amongst millennials: 35% of millennials DO NOT expect to rely on Social Security for any of their monthly income after retirement. 67% Millennials estimated that they would need an average of $1.83 46% 43% million dollars saved to retire in the way they want. 401(k)/403(b) IRA CDs 80% of millennials reported - MILLENNIALS VS. BABY BOOMERS - that the effects of the 2008 72% of millennials are confident that they will be able to save what they need for retirement compared to 64% of baby recession taught them that they need to begin saving now to survive economic problems. boomers, but 40% of millennials were not sure of the amount of money they would need for retirement, compared to 54% of baby boomers. 46% of millennials are saving 1% to 5% of their income. Although millennials are more confident than baby boomers that they'll be able to save enough for retirement, the fact that millennials don't know the exact amount they'll need to save is troubling. That's their trusted financial advisors. when millennials turn FINANCIAL ADVISORS Trusted Financial Advisors for Millennials This is the inverse of baby boomers, who put their trust primarily in personal finance experts, followed by financial institutions, and finally family members. 67% 46% 43% Dersonal finance family financial institutions experts a third of milennials have used online sources to determine O how much they should be saving of millennials using The a professional financial advisor doubled to 16% from 2013. for retirement. Those who do not use financial advisors cited costs as the primary reason. So, What Will I Save? When it comes to IRA accounts, the expected rate of return on investment is the most important means of determining how much you will make in the long run. After that, it all depends on how much you contribute and whether or not your employer offers any sort of contribution matching. IRA RETURN Current age: 25 year old Expected Retirement age: 65 Average Annual IRA Contribution: $3,350 Expected Return Rate: 8% Result: Will ultimately contribute $134,000 with a potential retirement fund of $937,266. THE RULE Take your expected rate of return and divide by 72 to find how many years it will take to double your money (at a rate of 7%, your money doubles in 10 years). OF 72 The Scary Truth About Savings Roughly half of Americans are saving 5% or less of their incomes, including 18% that are not saving anything. Saving 5% or less No savings Experts recommend saving 15% of your income for retirement. Experts recommend retirees live by the "4% rule" - withdrawing no more than 4% from savings each year after retirement. In 2014, the average amount saved for retirement was $100,000. If you were to retire with only $100,000 saved and followed the "4% Rule," you would withdraw $4,000 yearly, which gives you only $333 per month. Relying on Social Security won't get you far after retirement either. According to the Social Security Administration, the average person collected $1,300 a month in 2014. Tips To Prepare For Retirement The EARLIER you begin saving, the LESS LIKELY you are to run into trouble down the line. START SAVING ANOW TAKE ACTION! START SAVING NOW Millennials should heavily consider opening an automatic savings program and make it a goal to deposit a minimum of $25 each week. If you open a savings account with the initial amount of $25 and add $100 every week at 7.0% annual interest, you will have saved a total of $488,191 at the end of 30 years. V BE AGGRESSIVE Conservative investments like bonds are typically risk-free, more or less, but their rate of return is often just ahead of the rate of inflation, meaning, ultimately, very little in the way of return. Stocks, on the other hand, while riskier, have traditionally grown at a rate of around 10%, well over the rate of inflation. Investors in their 20s will typically be saving for long enough that the predictable dips in the market will not significantly affect their savings in the long run. V GET ADVICE Professional advice is available from a variety of places, with many employers often employing financial experts specifically for the purpose of educating employees on retirement and investing. V BUILD AN EMERGENCY STASH Begin building an easy-access savings account for emergencies: medical expenses, car troubles, etc. Most experts recommend building a cushion of about six months to avoid having to take on credit card debt or loans for emergencies. V AVOID DEBT Whatever can be done to avoid debt, be it a second part-time job, another roommate, or anything else, will work to the benefit of the saver in the long run. uschamberfoundation.org | Millennial Generateion Research Review whitehouse.gov | Millenniais Report PDF wellsfargomedia.com | 2014 Millennial Study Report statisticbrain.com| American Family Financial Statistics thefiscalfemme.com | Retirement Account Comparison |Expected Rate Of Return Nail It Or Else bankrate.com | Retirement Planning For 20 Somethings money.cnn.com| Income Saving Habits fool.com | The Typical American Has This Much In Retirement nooga.com | Saving For Retirement: How Much Is Enough? money.usnews.com | How Seriously Should You Take Reitrement Savings bankrate.com | Simple Savings Calculator Liberty Bank Trust & Integrity Since 1898

Why Millenials Need To Re-Think Everthing They Know About Saving Money

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Liberty Bank for Savings of Chicago has put together this useful infographic for Millennials about saving money for retirement.

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Liberty Bank

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