Millennials Most Common Money Mistakes

Millennials Most Common Money Mistakes

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2016-08-16

Although young Americans who graduated this year are better off than their older siblings, they’re still feeling some effects of the Great Recession. One thing they are doing right is starting to save earlier than previous generations, but their biggest money mistakes are not saving enough and holding what they do save in cash. 

Millennials will have the biggest retirement savings burden in history due to longer life spans, higher health care costs, fewer pensions, and the uncertainty of Social Security. For a 20-something, retirement might seem a lifetime away, and it literally is that for these Millennials. 

A recent NerdWallet study revealed that they’ll have to work until at least age 75, and they’ll need a much bigger retirement fund than in the past. Older Millennials — those born in the early 1980s — will need about $1.8 million to maintain their standard of living in retirement while younger Millennials — those born in the late 1990s — will need upwards of $2.5 million, according to various studies, estimates, and experts.

Saving just 10% of their income and keeping it in a checking or savings account or a term deposit such as a CD won’t get these young adults to their retirement goals. These types of accounts currently pay at best 1.5% interest. The magic of compound interest over time is what does the trick.

Money Tips for Millennials

  • Start saving right away 
  • Save at least 10 – 15% of your income for retirement
  • Don’t put your savings in a cash account  
  • Contribute to a retirement plan at work (401K)
  • Take full advantage of the employer’s match funds [4]
  • Open an IRA  

These figures show how a Millennial could make retirement savings a smart money move instead of a mistake. If you start your retirement savings at age 25, this is how it could look.

 

IMPORTANT DISCLOSURES

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities. 

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. 

Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable-- we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC

Tags: David Lerner Associates, Millennials, Financial Literacy, Age based info, saving, 401k, IRA, retirement planning,

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About

Founded in 1976, David Lerner Associates is a privately-held broker/dealer with headquarters in Syosset, New York and branch offices in Westport, CT; Boca Raton, FL; Teaneck and Princeton, NJ; and White Plains, NY. For more information contact David Lerner Associates Call 516-921-4200 Visit our website: www.davidlerner.com

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Contact

Jake Mendlinger
Account Manager
Zimmerman/Edelson
516.829.8374 X 232
jmendlinger@zimmed.com

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