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Millennials hope to retire at 61: Here's how much money those who are saving have so far

“There are so many competing priorities.”

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Millennials have widely been portrayed as lazy, entitled, latte-loving adults who've hopped from job to job and lived in their parent's basements for the past decade. The reality is that this generation has faced a lot of financial setbacks and challenges, including massive amounts of student loan debt and the Great Recession right when many were entering the workforce. Even so, they've saved a good amount of money for retirement.

Some are even aiming to retire on the early side: roughly 15% of millennials, according to a survey by Northwestern Mutual. People of this generation are actually twice as likely to think about early retirement as zoomers and almost three times as likely as Gen Xers, the poll found. They expect to retire on average at 61, about seven years earlier than Boomers (68.8).

So how do their savings stack up? The average American born between 1981 and 1996 with retirement accounts has $166,430 set aside, according to data from wealth management platform Personal Capital. People born in those years count as millennials, according to Pew Research.

By comparison, Gen Zers, born in 1997 or after, have $35,197. Gen Xers (1965-1980) have $568,750, and baby boomers (1946-1964) have $1,029,840. To find the average retirement balance for each generation, Personal Capital analyzed the savings accounts, including 401(k)s and IRAs, of more than 2 million of the website's users.

Personal Capital's findings correlate with data from Fidelity based on its account holders, which showed that as of the fourth quarter of 2020, 20- to 29-year-olds had an average of $15,000 saved in a 401(k). Those ages 30 to 39 had $50,800, 40- to 49-year-olds had $120,800, and 50- to 59-year-olds had about $203,600.

Millennials show financial resilience, money savvy

Whether all the millennials who hope to retire early will be able to isn't clear. Millennials "might be a little bit more optimistic on their ability to pull their finances together before they approach retirement," Chantel Bonneau, a Northwestern Mutual advisor in San Diego, previously told Grow.

They do have several advantages over Generation X, though, including more time with which to invest and grow their wealth.

And overall, despite the challenges they've faced, millennials tend to have a bright outlook. "Because there are so many competing priorities for the limited dollars in the paycheck," says Greg McBride, chief financial analyst at Bankrate, financial savvy has become common among the generation. Young people are learning to automate their savings and pay themselves first.

While millennials have had less time to save than older generations, they have also had to cope with significant financial stress. The oldest millennials, who are turning 40 this year, graduated into the worst economic downturn since the Great Depression.

Millennials have needed to learn financial resilience "at an earlier age than their predecessors" because they have largely been debt-burdened throughout their adult lives, says McBride. Resilience is an important skill, he says, since the generation "will have longer life spans and fewer pensions than the generations preceding them."

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The pandemic has slammed many Americans' finances, and it's done so while millennials are trying to save for life goals like buying a house or getting married. Plus, stagnant wages have meant that millennials' spending power isn't growing even as their expenses are.

Real estate costs are on the rise, making housing the most burdensome monthly expense for one-third of older millennials, according to a survey conducted by The Harris Poll on behalf of CNBC Make It. Increased medical costs have plagued millennials, and ballooning student debt is on another level. Borrowers in the United States owe a collective $1.7 trillion, according to data published by the Federal Reserve.

It's no wonder almost 70% of millennials approaching middle age say student loans affected their ability to reach a milestone including saving more for retirement, the CNBC Make It poll shows.

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How you can save more money for a secure retirement

While early retirement may be tricky to arrange, preparing for a secure retirement can be straightforward: Start saving now if you haven't yet and keep the pedal on the gas. With regular contributions over the course of your career, you capitalize on the power of compound interest to help your money grow.

Even if you are getting off to a late start or simply can't save much because of the pandemic, a small stream of money helps. For example, let's use the example of a 25-year-old earning $50,000 a year working at a company with a 5% match. If that worker starts by contributing 3% of their salary and gradually scales up to 10%, they'd have $1.4 million by the time they turn 65, according to data from JP Morgan. That's assuming an annual wage growth of 2% and a 5.75% annualized return after fees on their investments.

"Many young investors are dealing with student loans or a mortgage payment, but it is imperative they start saving for retirement immediately," says Brian Carney, a certified financial planner and co-founder of RiversEdge Advisors. "Early investing can prevent the need to aggressively catch up in future years. Due to the power of compounding interest, the first dollar invested will likely be the one that makes them the most money."

Experts recommend investing about 15% of your paycheck in a workplace retirement account, with your own contributions and any your employer makes. Grow's retirement savings calculator can help you pinpoint a goal tailored to your circumstances.

"Focus on automating and maintaining consistent savings of at least 10%, and ideally 15%," says McBride. "Form that habit as early as possible and it will stay with you in the years ahead as your earnings grow."

Although millennials are juggling "saving for retirement, building emergency savings, and putting money aside for a home," McBride says, the right financial know-how can make it possible to "work toward multiple savings goals simultaneously."

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