A Snapshot of Millennial Retirement

What the golden years will look like for today’s young people

Patrick Allan
Jan 24 · 5 min read
Photo by Simon Fanger on Unsplash

If you’re in your twenties and haven’t started thinking about retirement, well, it’s probably time to start. Yes, it’s still very far away, and yes, it’s easy to imagine that by the time the millennial generation hits retirement age, we’ll all be living in some sci-fi realm where health care is less complicated and robots take care of the elderly. But in the real world, enjoying your golden years requires careful planning long before you reach them.

And that planning takes on new urgency when you consider the fact that retirement a half-century from now will almost certainly look different from retirement today. Life expectancy is getting longer, climate change is threatening many popular retirement destinations, people are less likely to get married or have kids, and more people are working past the age of 65 just to get by. Here are the major things you should consider as you begin to outline your road map to retirement.

Social Security will still exist, but it won’t be enough

It’s estimated that our Social Security trust will be gone by 2034. To put an alarming number in context, that doesn’t mean there won’t be any money available at all by the time millennials are eligible to receive it. It simply means there won’t be a surplus of Social Security funds to fall back on. A majority of current Social Security payouts actually comes from taxpayers, and that will remain true in the future.

But as finance writer Kristin Wong, author of the book Get Money, explains, future generations are likely to get a lot less money in their payouts if things stay on the current course. That means Social Security definitely won’t be enough for you to live on and may not even be enough to be a major factor in your budget planning. Wong suggests you prepare for the worst and do whatever you can to avoid depending on Social Security. “Save like your retirement depends on it,” she says. “Because it kind of does.”

You’ll still be able to retire somewhere nice despite climate change

Cold places are getting warmer, warm places are getting too warm, and sea levels are rising. The growing threat of climate change means that many of today’s warm coastal retirement hot spots will be too battered by extreme weather and rising waters to have the same pull in a half-century.

The image that comes to mind when we think of a typical retirement destination won’t look quite the same, but according to Matthew E. Kahn, plenty of alternatives will fill the void. Kahn, who specializes in how the environment influences our economy, notes that 50 years from now, there will be roughly 100 million Americans over the age of 65, more than double today’s number. This means a huge market for retiree-friendly communities, with more places competing to be where seniors go to spend their retirement money.

“Each person has his or her own conception of the ‘good life.’ If you are very sensitive to heat, or if you love playing chess, or if you love to ski, or if you love Chinese food, then you will make a different senior-citizen locational choice,” Kahn says. “You will find the right ‘ecosystem’ for you.”

Total independence will come with challenges later in life

According to the U.S. Census Bureau, more and more young adults are opting not to get married or partner up and a growing number are choosing not to have children, which down the road may mean a rise in so-called elder orphans — seniors with no spouse, children, or other immediate family.

For young people who suspect that may apply to them someday, Wong suggests being extra diligent about saving now for the additional costs that come with independence later in life: long-term care insurance, elder care, and other expenses that may otherwise be shared by a partner or lessened by children shouldering some of the burden. (On the other hand, not having kids will save you a ton of money, Wong notes, so invest as much as you can, as early as you can.) You’ll also have to decide who will make medical decisions for you if you can’t make them on your own, determine who you’ll add to your living will and health care proxy, and set up a power of attorney for someone you trust to handle your finances — all things to start considering well before they become necessary.

Working into old age will become more common

Once upon a time, the rule of thumb was to save 10 percent of every paycheck, but Wong notes two major problems with relying on that approach today. First is that 10 percent probably isn’t enough to cover the cost of living in retirement, especially with the uncertain future of Social Security. The best way to figure out how much you should be saving is to use a personalized retirement calculator — like one from Fidelity or Bankrate — to get a sense of what you can comfortably manage and what sort of timeline that puts you on.

But the second problem is that there’s a difference between what you should be saving and what you actually can save. And with rising student debt and housing costs, socking away any amount at all is more difficult than it once was — an issue compounded by the fact that life expectancy will also rise over the next several decades. A longer life means a longer retirement, which means you’ll need enough savings to sustain yourself longer than today’s retirees.

Many Americans believe they will have to continue working past retirement age out of financial necessity. According to the Bureau of Labor Statistics, a good chunk of them already do. For millennials, whose collective lack of retirement savings has been well-documented, that pattern is likely to continue. Participating in the gig economy may also become a more popular option for seniors in need of extra funds (assuming it’s still an option at all in 50 years and hasn’t been entirely replaced by self-driving cars and automated workers).

It all seems bleak, but one way you can help yourself save for retirement now is to make sure you’re being paid what you deserve at your current job and any future jobs you interview for. Not negotiating for a higher salary early in your career could potentially cost you thousands in the long term, assuming you save or invest it properly. Do your research on what kinds of salaries people at your level should be making, and don’t be afraid to bring it up when the time comes — negotiating can be intimidating, but the potential happiness of your golden years is a powerful motivator. There’s a lot we don’t know about what the world will be like for the elderly in 50 years. Here, at least, is something you can control a little bit right now.

Patrick Allan

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About this MAGAZINE

2069

Bionic brains. Robots. Cutting-edge efforts to blunt the effects of climate change. The future of health care, and tech, and business. Our January issue of Medium magazine — 2069 — draws on reporting, expertise, and imagination to predict what life will be like in the next 50 years.

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