Earlier this week, the Omaha-based brokerage firm T.D. Ameritrade released a survey indicating that the average millennial expects to retire by age 56.
ABC10 asked a local financial planner if this seemed on target.
The answer, according to Towerpoint Wealth President Joseph Eschleman is yes, it’s possible, but it’s probably not going to be the norm.
Although millennials tend to be more aware of the necessity for saving, and more financially literate and savvy about investment than Baby Boomers or Gen-Xers, they also live in a more expensive world than that in which those generations came of age.
To retire by 56, a 20-something worker should probably be socking away 20-25 percent of their income, Eschleman said. And while millennials are also savvy at finding ways to cut corners, and possibly less reluctant to live with parents than previous generations, people are people.
Eschleman does not think millennials are any more or less likely to make large sacrifices now for the future than any other generation.
“The singular word is discipline if you want to retire early ," Eschleman said, adding that the keys is making sure "your money’s working for you instead of vice-versa."
About 66 percent of people 21-32 have nothing saved for retirement based on a National Institute on Retirement Security study of 2014 census data.
Many experts say millennials might have to work longer than their parents and grandparents to have enough money for retirement, according to CNN Money.
However, life spans are lengthening, Eschleman said.
A millennial who retires at age 56 could be looking at a 40-year retirement to fund.
“Life is about moderation,” Eschleman tells his clients.
While you might want to tighten your belt a bit to save for the future, don’t tighten it so much you can’t breathe.
“Be flexible enough to make adjustments when life throws you a curve ball – because it will,” he said.
As financially savvy as they may be, millennials, who have been inventive and resourceful at circumventing costs and limitations of all kinds, might be banking (no pun intended) on finding a hack or work-around to the daily grind.
Anything’s possible, but experts say probably better not to bank on it. Food, housing, clothes and all the various services of modern life cost money, and there's no indication that will change any time soon.
At present, full Social Security retirement doesn’t kick in until age 66 (you can start drawing at age 62, but that will reduce the amount you get).
Those who retire at 56 will need savings equal to at least 10 times their yearly expenses – an estimate that doesn’t include adjustments for inflation or abrupt changes in plan, such as illness or other contingency, according to Investopedia.
As pleasant as quitting work while you’re still young enough to enjoy it might sound, meaningful work is still a time-tested path to fulfillment and even happiness.
So the goal is not necessarily to quit work, but to be fulfilled and happy.
“Work because you want to, not because you have to,” Eschleman said.
But that shouldn’t be an excuse not to make prudent plans for the future. Your chances of working because you want to, not because you need to, are materially improved by not needing to work.