Trends indicate millennials may not retire until 75
Students and recent graduates already dreaming of retirement and all the joys that come with it may be in for a surprise.
Millennials may not retire until the age of 75, which is more than a decade older than the current average retirement age of 62, according to Yahoo Finance. Rising rent prices, student loan debt and a fear of investing has increased the retirement age 13 years.
There has been an 11 percent increase in rent nationwide and a $5,500 increase in student debt, while millennial wages remain stagnant.
The article predicts rising expenses could amount to $684,474 in lost retirement savings for 2015 graduates.
Dawn Bennett, founder and CEO of Bennett Group Financial Services, believes the retirement age has risen because millennials are unable to save much money early on in their career.
Many millennials do not invest due to student loans, high renting rates and fear of investing. Forty percent of millennials would rather put their money in a regular savings account than invest it in the stock market, according to a study by Bankrate.
Drucilla Cornell, a professor in the Department of Political Science, said gender may affect retirement age. Cornell recently signed a retirement agreement which allowed her to retire at age 67.
“I think there is a discrepancy between men and women. Women tend to retire earlier than men,” she said.
There remains a great deal of sexism at the university level, she said.
“Women get tired of fighting ... women identify with other parts of their life, while for many men their primary source of self worth is work,” she said. “It is also true that university professors do not make great salaries so there is undoubtedly financial anxiety.”
But millennials can take steps to prevent this.
Millennials should save more and save early, according to the Yahoo Finance article.
Young people can live at home for a period of time in order to avoid the cost of rent, according to Reuters. It is advised to live at home until the age of 25 in order to retire five years earlier.
Millennials also need to be fearless, according to Reuters, which means putting the vast majority of assets into stocks. Investing wisely in the stock market is crucial for their future.
By increasing their savings rate, millennials can also have a longer retirement, according to the article. A savings rate of 10 percent annually has the potential to bring retirement age down to 70, and 15 percent can bring the retirement age down to 65.
Creating a budget and tracking your spending can also prolong retirement.
Shahar Platt, a School of Arts and Sciences sophomore, said although she is focused on other problems right now, such as the rising cost of tuition and student debt, she still is concerned about retirement.
“On the one hand, this is not a worry because I’m fully invested in my education right now, but on the other hand, I’m always thinking of my future and I know this may cause problems for me one day,” she said.
Ross Baker, a professor in the Department of Political Science, said working past 65 years old is no longer a novelty.
“There is not just the matter of the need for extra retirement income for those who didn't start saving early enough but the even more important evidence that work prolongs mental fitness,” he said.
Life expectancy is much longer than it was when Social Security was established in 1935, he said.
“Unless a person is in a job that is just drudgery or is dangerous, I think that the option to work into your 70s or even beyond is a great prospect for those in a position to do it,” Baker said.