A successful and relatively long career and early retirement are not incompatible.
That’s the mindset of millennials, who have their eyes set on retiring at the youthful age of 59. While Baby boomers are focused on retirement, millennials are the standout generation for their perspectives on savings and retirement planning. A recent survey shows that they are more than three times as likely to plan out retirement early when compared to their Gen Xer counterparts, despite their age.
And when they are asked about the ideal age of retirement, they typically answer with an accelerated timeline in mind. They think they can do it by 59, but they are cautious and understand some limitations.
Millennials also feel a little pressure to successfully plan for retirement. Following a devastating pandemic, which continues to have ripple effects on the economy, they worry about financial losses to their retirement resources. People between the ages of 26 and 41 also worry about a worst-case scenario: another major event wiping out their savings and investments.
Overconsumption, soaring living costs, student debt and general inflationary pressures aren’t helping matters.
Nevertheless, financial experts maintain that millennials, and others, can achieve their goals with some solid planning. Early retirement is also on the table, which is a testament to how seriously millennials are thinking about their financial future.
To their credit, millennials are taking big steps forward. Their long-term savings and retirement account balances are a beacon of financial hope. Collectively, their financial resources are only growing, including 401(k) accounts. They are up by 11% year over year, according to Fidelity Investments. In addition, the overall balance of their 401(k) accounts has reached nearly $50,000 and the IRAs are also healthy.
While there’s a pathway toward early retirement, there are several considerations to account for before declaring financial freedom for life. Lifestyle preferences is a big one. It goes without saying that the more you plan to spend in retirement, the more you’ll have to save.
Workers should aim to retire with about 10 times their income and also follow the 50-15-5 rule. It recommends allocating half of take-home pay to cover expenses. Traditionally, the rule was based on 50-30-20, leaving 30% for discretionary spending and 15% for retirement. The remaining 5% should be set aside for emergencies.
If you’re a little closer to retirement age than the millennial generation, a Home Equity Conversion Mortgage is a powerful tool to accelerate your own timeline and boost your savings in one sweep.
This program usually requires a 50% commitment and in return, the borrower will no longer make monthly payments as residents of the home. They will also find new financial freedom and flexibility on their road toward retirement life.
Please contact us today to learn more about this opportunity to boost your income, eliminate the mortgage payment and make good on your retirement plan.
*(1) at the conclusion of a reverse mortgage, the borrower must repay the loan and may have to sell the home or repay the loan from other proceeds; (2) charges will be assessed with the loan, including an origination fee, closing costs, mortgage insurance premiums and servicing fees; (3) the loan balance grows over time and interest is charged on the outstanding balance; (4) the borrower remains responsible for property taxes, hazard insurance and home maintenance, and failure to pay these amounts may result in the loss of the home; and (5) interest on a reverse mortgage is not tax deductible until the borrower makes partial or full repayment. This material is not from HUD or FHA and has not been approved by HUD or any government agency.