Today, the current crisis facing the nation’s social security fund may be alarming for older Americans, but it’s an even scarier time for younger generations. A recent article in Bloomberg states that more than half of millennials say that they’d decrease their salary in lieu of additional retirement savings.
As the author noted, this may seem like a high percentage, especially as we consider the large amount of debt that many college graduates face. And while we may associate millennials as bad savers, it doesn’t mean that they’re not aware that the problem exists.
With many millennials out of work or finding part-time positions, saving for retirement may be an option that’s not easily achievable in today’s economy. And if a company is not mandated to contribute towards retirement, this leaves many Americans out in the cold.
Today, it’s estimated that an individual facing retirement should comfortably have saved at least 400,000 to live comfortably. It’s important to note that this number does not include the boost from social security income or a pension.
How does one go about saving for retirement when there are few structures in place? To start, younger generations must be more conscientious about saving annually for retirement. This isn’t always an easy or available options. Investing in a new system may be appealing for many reasons. And while the concept may seem new to many Americans, countries like Australia have adopted newer policies in the past after reaching a tipping point.
Perhaps the biggest reason millennials may be attracted to a change in retirement savings is linked to a timely event: their own parents’ retirements. As baby boomer parents and grandparents struggle through their own retirements, millennials are tasked with care-taking responsibilities. And unlike previous generations, baby boomers are staring at a tightened social security package. This means where they live and how they’re cared for often falls on their children.
The United States has operated under the same social security program since its inception by President Franklin Roosevelt in 1935. In theory, the law provides small incomes for retirees through payroll taxes. But under the current system, the fund faces major deficits, as more and more retirees look towards the fund to keep them above the poverty line.
Due to the compromised position of the fund, it’s not unfair for younger generations to question if the fund will be able to provide benefits once they reach the retirement age.
Exploring new options to secure one’s future is absolutely an essential goal in today’s economy. Still, the question remains. If the option existed today, would you take a pay cut for future financial stability?