Often when people speak of the millennial generation, the term becomes a catch all for young people, with a lot of the crazy fads and challenges like the tide pod craze that overtook the U.S. in early 2018 being attributed to the millennial generation. However, this is actually the work of an even younger generation (called “Gen Z” for now) while millennials are quickly moving into the middle of their lives. Depending upon the source, the youngest millennials are 22 or 23, and have likely finished college and made their way into the workforce at this point, while the oldest members of the group are nearly 40. This means that a significant portion of millennials are considered middle aged and will likely be thinking about retirement more and more as time goes on. As the generation moves into the middle period of their lives, the question of how to save for retirement, and the mechanisms used for that saving, will need a solution.

Millennials Can’t Rely On Social Security

When social security was created to guarantee American workers some income when they became too old to work, there were ten workers for every retiree, where now there are only two. Soon the amount of retired workers to people paying into the social security system will flip. The system is paying less and paying later to people across the country, putting the burden of savings for retirement squarely on the shoulders of American people. While members of Gen X might be able to benefit from the system that they have been paying into their whole lives, the millennial generation is being told by experts to begin saving now and to expect social security to be long gone by the time they hit retirement.

The Death Of The 401(k)

The 401(k) is one of the most common ways for people to save money for their retirement, as they are often set up for an individual through their company and sometimes companies are even willing to match a person’s contributions as part of their compensation package. This seems ideal and yet there are many problems with 401(k)’s that millennials are not aware of. Two of the biggest factors that should be considered for millennials, and anyone saving for retirement with a qualified plan, is the market volatility that can wipe out your earnings overnight in the case of an economic downturn. Financial experts make sure to reinforce the idea that these plans are meant to ride for the long haul, but one downturn could take 20 years to recoup and some millennials already don’t have that kind of time to recover. Furthermore, the taxation of money paid into a 401(k) might be tax deferred for now, but as the income is withdrawn later in life, the money is taxed at a personal income level rather than a pre-capital gains tax structure, meaning you pay more on money you are supposed to survive on after you quit working. Add to that the diminishing value of a dollar and the 401(k) doesn’t look so great after all.

Millennials Are Idealistic About Retirement

The millennial generation is very different from their predecessors in the way they work, operate, spend money and live. There are countless articles on the various industries that millennials have affected with their purchasing decisions that differ from Gen X and the Baby Boomers before them. Millennials are not wrong in their thinking, but grew up in the wake of several generations affected by war, political and economic changes, and technological advancement, which has affected their scope on the world and their place in it. However, many members of the millennial generation are idealistic about the age at which they retire, hoping to retire early at 61. Retiring at such a young age takes dedication, planning, and savings, which only 33% of millenials have. This presents a dilemma for anyone wanting to spend their twilight years out of the workforce. How are millennials to save for retirement effectively and retire when they want to if they put in the hard work?

Infinite Banking Has No Age Limit

Luckily for millennials, there is a savings solution that will maximize their contributions for the future and protect their earnings while they are still in the workforce in a way that 401(k)’s and other qualified plans cannot promise. The Infinite Banking concept using specifically designed whole life insurance policies is a savings and wealth growth process that has been used by some of the wealthiest and smartest people in the United States. Many millennials are simply lacking the knowledge and guidance to save for retirement and that’s where Factum Financial comes in. Our wealth strategists can craft a cash-flow system that can maximize individual savings and offer true compounding, while truly protecting growth from excessive taxation. Contact Factum Financial for more information today.

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