Younger generations may never experience retirement as it’s defined today, according to the latest analysis in the Merrill Edge Report series.
According to Merrill researchers, the vast majority (83%) of Millennials plan to work in retirement, whether for income, to keep busy or to pursue a passion. The analysis suggests this is “a complete inverse of the 83% of today’s retirees who are not currently working or never have during their golden years.”
The analysis shows half of younger Millennials, ages 18-24, believe they need to take on a side job to reach their retirement goals, compared to only 25% of all respondents.
“Perhaps this mentality is why Millennials (15%) are three times more likely than Gen-Xers and Baby Boomers (5%) to rank an employer’s retirement plan as the most important factor when taking a new job,” the report explains.
“In previous reports, we found younger generations were redefining what it means to retire. This report goes one step further and questions if the milestone as we know it today is nearing extinction,” adds Aron Levine, head of Merrill Edge. “If Millennials and Gen-Xers want a traditional retirement, they need to take action in the short term and plan for the uncertainties of the long term, especially as we continue to see competing priorities, such as paying down debt and caring for aging parents and children, derail these good intentions.”
NEXT: Saving insecurities
Asked what their dollar-enumerate target for retirement is, 56% of respondents don’t anticipate needing more than $1 million, and 19% simply “don’t know.” Nearly the same number of respondents “believe they need to win the lottery to reach their financial goals in retirement.”
When asked why they are saving, the majority of Americans cite affording daily life (57%), closely followed by taking care of family (45%).
“But this doesn’t mean all respondents are comfortable discussing these affairs with their closest relationships,” the report clarifies. “Only 36% are comfortable talking about current retirement savings with their family members.”
Merrill researchers predict the “investment ideals of yesteryear” are also likely to become defunct as younger generations are increasingly describing their investment approach as “hands on.” However, any sense of self-reliance “seems to be increasing a need for further financial guidance and validation from professionals in these decisions.” In fact, Millennials are most likely to plan to hire a financial adviser within the next five years (31%), and are the most open to receiving financial advice online (42%).
“Younger generations are taking a more active approach to saving for retirement. Many investors across all age groups are now merging the guidance they receive from a variety of sources, whether it’s online or in-person with an adviser,” Levine concludes. “This growing shift is a significant driver of our decision to develop an online investment advisory program that combines the best of both worlds to help customers feel more confident in their investment decisions.”
For more in-depth information about the financial behaviors and priorities of mass affluent Americans, read the entire Fall 2016 Merrill Edge Report here.