How Much Are Millennials REALLY Saving For Retirement?

Summary

In this video, Shane explores how millennials are saving for retirement and compares their savings to Gen X and Baby Boomers. He discusses the average retirement savings of different generations and highlights the challenges millennials face due to inflation, rising costs, and the likely disappearance of Social Security. Shane predicts that many Americans will retire abroad, taking advantage of currency differences to live more affordably. He suggests that this trend may become widespread, with over 50% of retirees opting to move to other countries for a more financially sustainable retirement.

Takeaways

• 😀 Millennials are saving less for retirement compared to previous generations, with an average of $166,000 saved.
• 😀 Many millennials are considering early retirement, being three times more likely than Gen Xers and twice as likely as Gen Zers.
• 😀 The four percent rule suggests that to retire comfortably, one should have around $1 million saved, equating to $40,000 a year in withdrawals.
• 😀 Baby boomers have an average of $1 million saved, which is enough to retire with a modest income, but they also benefit from Social Security.
• 😀 Millennials may not have Social Security to rely on by the time they retire, making it harder for them to meet their retirement goals.
• 😀 Gen Z has only $35,000 saved for retirement, while Gen X has $568,000 on average.
• 😀 24% of people are not currently saving for retirement at all, according to a Wells Fargo survey.
• 😀 Common retirement savings methods include 401(k)s (53%), savings accounts (42%), Roth IRAs (22%), and real estate investments (16%).
• 😀 Inflation could significantly increase the amount needed for retirement, potentially requiring $2 million or more for millennials to retire comfortably.
• 😀 A potential solution for future retirees could be relocating to countries with a lower cost of living, utilizing currency arbitrage to live more affordably.
• 😀 The trend of retiring abroad is expected to grow, with a prediction that over 50% of retirees could move to other countries due to cheaper living costs.

Q & A

How are millennials different from previous generations when it comes to early retirement?

Millennials are three times as likely to think about early retirement compared to Gen Xers and twice as likely as Gen Zers, according to a survey by Northwestern Mutual.

What is the '4 percent rule' in retirement planning?

The '4 percent rule' suggests that you should be able to live off about 4 percent of your total investments each year. For example, if you have $1 million saved, you could withdraw $40,000 annually for retirement.

How much money do different generations have saved for retirement, according to Personal Capital?

According to Personal Capital, Gen Z has about $35,000 saved, Gen X has $568,000, and Baby Boomers have around $1 million saved for retirement. Millennials have approximately $166,000 saved.

Why might millennials need more than $1 million to retire comfortably?

Due to factors like inflation and the likelihood that social security won't be available, millennials may need more than $1 million to retire by the time they reach retirement age, possibly needing $2 million or more.

What percentage of people are saving for retirement, according to Wells Fargo's survey?

Wells Fargo's survey shows that 53% of people are saving for retirement through 401k or similar plans, while 24% are not saving for retirement at all.

Why might the social security system not be reliable for millennials, Gen X, and Gen Z?

The social security system is under strain, and with the way it is currently being run, it is unlikely that millennials, Gen X, and Gen Z will be able to rely on it for retirement.

What alternative retirement strategy does Shane predict will become popular?

Shane predicts that many people will use the power of arbitrage to retire in other countries where their dollars are worth much more, allowing them to live comfortably on a smaller retirement savings.

What impact could the trend of retiring in other countries have on global economies?

Retirees moving to countries with a lower cost of living will spend money in those economies, stimulating growth and benefiting both the retirees and the countries they move to.

How much would it cost to retire in other countries compared to the US?

In many countries, it costs significantly less to retire compared to the US. Retirees could live comfortably for a fraction of the cost, sometimes as little as one-fifth or one-tenth of what it would cost in the US.

What does Shane believe the future of retirement will look like for millennials and Gen Z?

Shane believes that as social media, business, and culture become more international, many retirees will move to other countries to retire, with over 50% of retirees likely living abroad in the future.