U.S. Millennials (born between 1980 and 1997) expect to retire at age 58—earlier than those in any other western market globally—and are taking a number of steps to make it happen, according to HSBC’s latest Future of Retirement research.
To help achieve their earlier retirement goal, the research found that 80% of U.S. Millennials have already started saving for their retirement, with another three-quarters (75%) citing plans to cut expenses to save more for retirement.
Nearly half of U.S. Millennials surveyed are willing to take on more risk in their investments to generate wealth. The research also found that investment appetite across other generations is stark. Only 27% percent of Gen X and 13% of Baby Boomers are willing to take on the same risk profile.
According to the study, U.S. Millennials are yearning to learn, with 63% actively seeking information to guide their financial decisions, compared to 49% of Gen X and 34% of Baby Boomers.
Despite their expectations and efforts to retire early, economic challenges and longer life expectancy present significant challenges to Millennials’ retirement plans.
HSBC wealth planning expert Brian Schwartz explains, “While Millennials are broadly aware of the economic and demographic challenges they face, they do not appear to have grasped how these factors could hinder their efforts to retire early and comfortably.”
For example, the vast majority of respondents (82%) anticipate higher health care costs in the future, while an additional 56% are concerned about declining social safety nets like state pensions and Social Security. Overall, respondents also anticipate that Millennials will live longer than previous generations, suggesting they will to need save for a longer retirement (62%).
Other key findings from HSBC’s Future of Retirement research include:
- 73% of working age people in the U.S. would defer retirement for two or more years to have a better retirement income;
- 65% of working age people in the U.S. anticipate working to some extent during retirement; and
- 46% of working age people in the U.S. would work for longer or get a second job to save more for retirement.