Keeping your retirement goals top of mind is key to keeping your strategy on track, regardless of your age.
Generation Gap Hits Retirement Expectations
As it turns out, people across all age groups have similar priorities when it comes to retirement, according to an annual Scottrade® survey. They want to travel and visit family. And they don’t want to work.
But the survey also indicates a wide chasm between how young people and older people think they’re going to pay for their retirement dreams. In short, the younger generations are far more likely than older folks to believe that they’ll need a part-time job during retirement. If that holds true, retirement in the future could look a lot different than it does today.
This is according to Scottrade’s 2016 American Investor Report, which asked more than 1,000 investors about their attitudes and behaviors regarding investing, finance and retirement.
Millennials especially don’t expect to stop working – a whopping 72% of them said they planned to supplement retirement income with work, compared to 56% of Gen X, 39% of Baby Boomers and 16% of Seniors. This may not be completely by choice. When asked what they want to do in retirement, only 23% of investors indicated they want to work part time – including less than 20% of Millennials. Gen X was the age group most likely to want to work in retirement.
These results indicate that many people believe they have to continue working in order to support themselves through retirement, even if it’s not their dream scenario.
“Fortunately, young people have an important advantage that older folks don’t – time,” said Joe Correnti, senior vice president of brokerage product at Scottrade. “And with time, a financial plan and some discipline, they can save enough to enjoy their dream retirement – without the worry of having to work part-time during retirement, unless that is something they choose to do to stay active.”
What to Do in Retirement?
When asked what they want to do when they retire, by far the most common response was to travel (72%). Traveling was the most desired activity among all age groups: Millennials (ages 18-34), Generation X (ages 35-49), Baby Boomers (ages 50-69) and Seniors (ages 70 and older).
Other retirement activities high on investors’ priority list include spending time with a spouse (55%), spending time with children/grandchildren (45%) and spending time with friends (42%).
“Investors should aim for their goals, so long as they’re realistic given their time horizon and risk tolerance,” Correnti said. “It’s important to plan for the retirement you want, not the retirement you may have to settle for.”
Prepare for Changes to Your Plan
Although it’s important to strive to reach your goals, it’s also important to understand that any retirement plan is subject to change, often due to factors that are completely outside of an individual’s control. This is especially true for people who are counting on working into retirement.
“You may indicate that you plan on working into retirement, but what if you can’t?” Correnti said. “We can’t predict the future with certainty, and whether it’s job loss or health concerns or any other number of factors, it’s important to understand that plans can change, and to prepare yourself financially for these changes.”
When to Retire
While the average Senior, Boomer and Gen Xer all plan to retire well into their 60s (if not already retired), Millennials were far more optimistic, planning to retire at age 55.
“If Millennials do indeed desire an early retirement, it becomes even more important that they begin planning and saving as early as possible,” Correnti said. “Even with a more condensed timeframe, time is still on Millennials’ side.”
Millennials certainly don’t seem too worried, especially compared to other generations. A mere 9% of Millennials indicated they were “not very confident” or “not at all confident” they would have enough money in their retirement accounts when they retire. This is compared to 21% of Gen X, 19% of Boomers and 10% of Seniors.
Question: What does retirement mean to you?
Next steps: Check out the entire 2016 American Investor Report.
The information and content provided is for informational and/or educational purposes only. The information presented or discussed is not, and should not be considered, a recommendation or an offer of, or solicitation of an offer by, Scottrade or its affiliates to buy, sell or hold any security or other financial product, or an endorsement or affirmation of any specific investment strategy. You are fully responsible for your investment decisions. Your choice to engage in a particular investment or investment strategy should be based solely on your own research and evaluation of the risks involved, your financial circumstances, and your investment objectives. Scottrade, Inc. and its affiliates are not offering or providing, and will not offer or provide, any advice, opinion or recommendation of the suitability, value or profitability of any particular investment or investment strategy.
About the 2016 Scottrade® American Investor Report
The 2016 American Investor Report survey was conducted September 14-22, 2015, in collaboration with Harris Poll, an independent third-party research firm not affiliated with Scottrade, Inc., its business units or subsidiaries. The online survey was conducted among a nationally representative sample of 1,001 adults, 18+ in the U.S. who are involved in investment decisions for their household and have $2,500 or more in investments with a full service brokerage company, online brokerage company or independent financial advisor under management. This online survey is not based on a probability sample, and therefore, no estimate of theoretical sampling error can be calculated.
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