15% of millennials now expect to retire early, study finds — here's why

More millennials are considering clocking out early than Gen Xers or Gen Zers.


While more than 18 million people in the U.S. continue to collect unemployment benefits, the pandemic has led some more fortunate American workers to save money and even plan for an early retirement.

The transition to remote work while earning a pre-pandemic income has encouraged less spending and more storing up for another day. Personal savings hit a historic high in April when economic uncertainty prompted more Americans to stockpile cash, and while the personal savings rate has fallen significantly since then, it's still at levels not seen since 1975.

The pandemic has also affected Americans' expectations for retirement. A recent study by Northwestern Mutual shows that while 20% of Americans expect that the pandemic will force them to retire later than they'd previously expected, another 10% expect to retire early. That number is even higher among millennials, 15% of whom now expect to retire early.

Younger workers may be 'a little more optimistic'

Millennials are almost twice as likely to be thinking about early retirement as Gen Zers and almost three times as likely as Gen Xers, according to the survey. One reason is that millennials are "reimagining what their life is going to look like," says Chantel Bonneau, a Northwestern Mutual advisor in San Diego.

On paper, that can make sense. Millennials are digital natives, and many of them transitioned to remote work without much problem. Some ditched pricey apartments in expensive cities and moved to cheaper areas or even back home with their parents.

That combination of factors has allowed some millennials to reevaluate their lifestyles and their savings, and it's made them ambitious about how far their money can take them, Bonneau says. She cautions, however, that these conditions may not last: Rent in a smaller city may be cheaper now, but it likely won't stay that way.

And companies are still figuring out the kinks of broad work-from-home policies, she says. In other words, some jobs could start offering their remote employees less money. "What people are not taking into consideration is if a company can support a work-from-home environment, they may not be forced to pay a big-city salary," Bonneau says, because those employers "now have a broader pool of talent to look for."

If a company can support a work-from-home environment, they may not be forced to pay a big-city salary.
Chantel Bonneau
Financial advisor, Northwestern Mutual

Those longer-term shifts, along with normal retirement expenses for medical care and increased costs of living, could come as rude awakenings later on for people now planning to clock out early, Bonneau says.

Overall, millennials "might be a little bit more optimistic on their ability to pull their finances together before they approach retirement," Bonneau says. And they do have several advantages over, say, Generation X: For example, they have more time with which to invest and grow their wealth.

Investing wisely can help you retire early

Retiring early is a lofty endeavor, but with enough time and the right planning, it can be possible — even during an uncertain time like a pandemic.

"You can find opportunity during uncertain times like this one, especially if you want to start investing," Kristy Shen recently told Grow. She and her husband began investing in the stock market during the Great Recession and retired a decade later in their 30s after growing their assets from $135,000 to seven figures.

Is retiring early actually a good idea?

Video by Stephen Parkhurst

Investing is indeed the key to retiring early, Steve Adcock, who retired at 35, recently told Grow. "When I think about building wealth, it helps me to see it as an equation: Wealth = Income + Investments - Lifestyle. Nobody ever got rich just by saving money," Adcock said.

That simple formula included prioritizing paying off debt and downsizing his discretionary budget by more than a third: He and his wife went from spending about $65,000 in 2014 to $40,000 two years later.

Both paying down debt and supersizing your savings are key tenets of the FIRE (financial independence, retire early) movement, which, as its name implies, encourages people to leave their careers in their 30s or 40s. FIRE also encourages you to adopt side hustles (which could later became a main job) and to meticulously track your financial progress and net worth.

That attention to detail was crucial for Adcock and his wife, who could "tell you how much [they] spent on sweet potatoes during the course of the year."

But the cornerstone of Adcock's early retirement plan was investing in everything from riskier stocks to more traditional employer-sponsored retirement accounts, he says. And whatever your method, it makes sense to give your money as much time as possible to work for you. "The earlier that you begin investing, the more money you stand to earn," Adcock told Grow.

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