Millennials Most Common Money Mistakes
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 
- 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.
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