While the majority of American millennials are starting early when saving for retirement, most aren’t saving enough now in order to enjoy a comfortable retirement later, a survey finds.
The Principal Financial Group survey finds 63% of millennial workers started saving for retirement before age 25. But less than one-third are saving at least 10% of their salary through their employer-sponsored retirement plan.
Saving for retirement competes with many big-budget items for millennials.
When asked to list their three largest budget items, it may come as no surprise that the top answers were mortgage/rent (65%), food (38%) and car/transportation (30%). Other major expenditures included basic expenses (27%), student loans (20%) and credit card debt (16%).
“Many millennials may see these large expenses—especially student loans and other debt—as primary obstacles to saving anything for retirement,” says Jerry Patterson, senior vice-president of retirement and investor services at The Principal. “But in most situations, it’s possible and necessary to both save for retirement and pay down debt by creating a plan and sticking to it.”
When asked at what age a young adult should be financially independent, 84% of millennials responded by age 25 or younger. And six of 10 millennials expect to be better off financially than their parents.
But some millennials report their parents are still footing the bill for various expenses, including their cellphone bills (12%), car insurance (8%), health insurance (7%) and rent/mortgage (7%).
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