Young adults newly introduced to the professional arena may not immediately be thinking of the future when their careers will come to a close. Retirement may seem like a distant goal when it’s 50 years or more away. However, pushing off retirement savings because it is not viewed as a necessity could turn out to be a significant mistake.
According to Mass Mutual, the economic disruption caused by the global pandemic pushed retirement to the bottom of many workers’ lists of financial priorities. That was especially so among young professionals. A 2019 survey found roughly half of millennial and Generation Z professionals believe they are not saving enough for retirement. Student loan burdens are another reason why certain people may delay saving for retirement until they are older.
Young workers need to get the facts about retirement. For example, The U.S. Social Security Administration says that Social Security taxes that people now pay into the Social Security Trust funds that used to pay benefits to current beneficiaries, not future ones. The Board of Trustees estimates that, in 2041, and based on current law, the Trust Funds will be depleted since people are living longer and the birth rate is low. The taxes being paid now will not be enough to pay the full benefit amounts scheduled for future retirees.
Young people can no longer rely on Social Security benefits to finance their retirements in the United States. Rather, young workers need to be proactive and take control of their own retirement savings.
Even if retirement is many years in the future, young workers need to start saving for retirement early on to be able to retire comfortably. MM23C518