Yahoo Finance Retirement Savings: Here’s How Much Money Millennials Should Have To Retire by 2045
Hard as it might be to believe, the oldest millennials will be hitting retirement age in a couple of decades. Those born in 1981 — considered by many the first birth year for millennials — will be able to file for Social Security benefits starting in 2043. But those who wish to retire comfortably will need a lot more than Social Security.
Read: Suze Orman, Warren Buffett and Other Money Experts Weigh In on How To Best Set Yourself Up for Retirement
Discover: 3 Ways To Recession-Proof Your Retirement
Depending on who you ask, millennials might need anywhere from $3 million to $4 million to retire comfortably, once you factor in inflation. They’ll probably need to reach the upper end of that range if they want to retire by 2045, when most millennials will still only be in their 50s (based on birth years of 1981 to 1996, which is how the Pew Research Center defines millennials).
Retiring in your 50s means you’ll have a longer-than-normal retirement to fund — in some cases four decades or more, based on longevity trends. That’s a very long time to live on a fixed income.
The “401(k) Participant Study — GenZ/Millennial Focus” released last year by Charles Schwab found that the average amount millennials think they need to save for retirement is $1.8 million. Spread over a 30-year retirement, that comes to $60,000 a year or $5,000 a month.
But most millennials are not on track to reach that goal — or even close. A 2022 Vanguard analysis found that as of 2021, American workers ages 25 to 34 had an average of $37,211 saved in their 401(k) plans. Those ages 35 to 44 had an average of $97,020 saved up.
If you take the average of those two amounts, which comes to $67,115, you would need to save an additional $1.73 million if you want to retire in 2045 with $1.8 million in savings. This means you need to save nearly $79,000 a year for the next 22 years.
Some financial experts think it will take a lot more than $1.8 million for millennials to retire comfortably.
As previously reported by GOBankingRates, an analysis conducted by Seeking Alpha found that younger millennials would likely need at least $3.6 million saved up to enjoy a comfortable retirement. This assumes you want to retire no later than age 62.
A separate analysis by Wealthcare Financial estimated that millennials and GenZers will need $3 million in retirement savings, The Motley Fool reported. That figure is based on cost-of-living estimates that younger Americans will need $120,000 to $150,000 a year by the time they reach retirement age.
The $3 million represents the upper end of the target range. The amount could be considerably lower depending on your lifestyle and where you live. Here are a few other retirement savings guidelines that Wealthcare Financial recommends for millennials and Gen Z:
$500,000 in retirement savings by age 25
$1 million by age 40
$2 million by age 50
$3 million by age 60
Explore: 3 Ways To Recession-Proof Your Retirement
Not there yet? Merrill Edge offers these tips:
Start early to take advantage of compounding returns.
Contribute enough to your 401(k) to meet your employer’s match.
Start an individual retirement account
Make catch-up IRA and 401(k) contributions once you turn 50.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: Retirement Savings: Here’s How Much Money Millennials Should Have To Retire by 2045
