The pandemic has brought about big changes for many Americans. Surprisingly, some of the financial changes resulting from COVID-19 have actually been positive.
In fact, a recent AIG survey called Going forward: Planning for the future in times of change showed that a generation is now much more optimistic about its retirement prospects than in the past. And she may be surprised to find out which demographic has improved her outlook.
These Americans are now much more positive about their retirement prospects.
According to the AIG study, millennials are the Americans who have experienced the greatest positive change in their view of retirement. A staggering 45% of millennials surveyed said they now have a more positive outlook on their retirement prospects after the pandemic, compared to just 26% of Gen Xers and 13% of baby boomers.
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This may come as a surprise, as members of this generation have faced unprecedented financial challenges. These have included record student loan debt, a Great Recession as they came of age and entered the job market, and slower economic growth during their time in the workforce than members of previous generations.
However, the optimism of millennials is not misplaced. AIG data also reveals that 53% of millennials were able to increase their savings rate in recent years, and 48% saw an increase in their savings and assets. Just over 4 in 10 millennials also saw their household income from work increase, while 39% saw their level of non-mortgage debt decrease.
Members of every generation can improve their retirement prospects with a few simple steps
While it’s great news that so many millennials have seen their financial circumstances improve and now show a more positive outlook on life in retirement, the reality is that everyone should be able to look forward to this time in their lives. The key to being excited about retirement is understanding what you need to be financially prepared for and taking proactive steps to ensure you have the funds. This involves:
- Detailed configuration retirement savings goals. Take the time to figure out how much money you’ll need as a retiree. There are a few approaches to doing this, even assuming you’ll need around 10 times your final salary. Then break your big goal down into smaller goals by calculating the amount you need to save each month. calculators in investor.gov to be able to help.
- Automate your savings efforts. The best way to ensure that you achieve your retirement goals is to set up automatic transfers so that the investment happens without any effort on your part. If you know you need to invest $500 a month, arrange to have the money taken from your paycheck to go to your 401(k) or have the funds transferred to your IRA or other tax-advantaged account on payday.
If you automate your savings efforts and consistently meet your investment goals, you should be able to look forward to retirement with the confidence that comes from knowing you’ll have the funds to support yourself after paychecks end. Whether you’re a millennial or a different demographic, you deserve to look forward to a life free of financial worries in your later years, so it’s worth the effort.
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