Right-size? Build confidence? Ramp up savings? Retirement considerations for each generation in 2021
A version of this article originally appeared on LinkedIn.
In 2020, people in every generation experienced health insecurity, financial and job insecurity, and market gyrations due to the COVID-19 pandemic. However, while there were lots of shared experiences last year, our 2020 401(k) Participant Study showed that each generation perceived and reacted to these pressures differently.
Looking ahead in 2021, the steps you can take to get back on track are a little different depending on your age. Here are a few suggestions to think about as you review your 2021 financial goals and set the course for the year ahead.
- Boomers: Right-size
As the group closest to retiring, our study finds Boomers are more concerned than other generations about market volatility and saving enough for comfortable retirement. If you are in this group, start 2021 by talking with a financial professional to get really clear about how long you expect your retirement money to last, and see if there are steps you can take now to right-size your nest egg if needed. This might include actions such as increasing savings rates, delaying your retirement a year or two, or even downsizing your living situation to redirect money into retirement savings.
- Gen X: Build financial confidence
Gen X felt the pressure on many fronts last year. Juggling careers with caring for children and possibly looking after parents, often within the constraints of remote school and work plus the wobbly economic environment.
As a group, only one in three Gen Xers think it's very likely that they will reach their retirement goals, and they are less confident overall than Boomers or Millennials. So, make 2021 the year you build up your financial confidence.
Start with a plan, whether it is one you create yourself (there are many great online tools and resources) or with outside help (most 401(k) plans offer access to tools and professionals). Mapping out a path for the year ahead, and for the longer term, can help you feel more confident about your financial situation.
- Millennials: Ramp up saving
Millennials are worried. Worried about job security and worried about saving enough for retirement. On average, they believe they will need a $2 million retirement nest egg.
If you are in this group, you have a big benefit on your side: time. Maximize that time by ramping up your savings rate. If you can, put a little more of each paycheck into your retirement plan. When compounded over time, those dollars can add up to a lot of savings come retirement day. Working with an online tool or financial advisor can highlight how much those small, regular savings increases can pay off come retirement.
For me, the New Year is always a period of reflection and planning, and after the rollercoaster of 2020, the opportunity to take a step back and look forward seems more important than ever. When it comes to your financial life, taking the time to evaluate and reset where needed can directly impact your overall happiness and wellness in the year ahead. I wish you an abundance of both.