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Millennial Retirement Savings: Catching Up to Financial Security

Millennial Retirement Savings: How Are They Doing and What Can They Do Better? As members of the largest workforce in the United States, millennials are becoming increasingly conscious of their retirement savings.

However, studies have shown that while the majority of this generation acknowledges the importance of saving for their golden years, only a small percentage are actually preparing for their future. In this article, we examine the state of millennial retirement savings, the factors that affect it, and what this generation can do to improve their financial security in the long run.

Percentage of Millennials Saving for Retirement

According to a recent study conducted by the National Institute on Retirement Security, a staggering 66% of working millennials have no retirement savings at all. This figure is consistent with other reports that show that young workers are not adequately preparing for their financial futures.

The trend is worrisome, as the cost of living continues to soar, and the economy remains unpredictable. While many reasons can be attributed to the low savings rate among younger generations, the most common culprit is high levels of debt.

Millennials have been saddled with student and credit card debt, which can often hinder their ability to save. Additionally, with a high cost of living, some millennials simply cannot afford to put money away for retirement.

Average Retirement Savings of Millennials

Of the millennials who do have retirement savings, the average balance is shockingly low. According to a study by CNBC, the typical millennial has only $23,000 in retirement savings, which is far less than what is recommended for their age range.

Experts suggest that 30-year-olds should aim to have at least a year’s salary saved, and those in their 40s should have three times their annual pay put away in retirement savings. The low savings rate and low balances bring many millennials to the realization that they are behind in their retirement savings goals.

Therefore, it is essential to understand the factors that affect their retirement savings.

Effect of Income on Retirement Savings

Income is an important factor when it comes to retirement savings. The more one earns, the more they can afford to put towards retirement savings.

However, it is also true that income can help create a cycle of financial stability or instability, depending on how it is utilized. It is common for individuals with a higher income to carry more significant debt loads.

While they may have more money coming in, they may also have more going out. According to studies, 35% of millennials who make less than $50,000 per year reported having retirement savings accounts, while 56% of those making over $50,000 did.

While it is understandable that those earning higher salaries have more money to allocate towards savings, it is important to remember that an adequate retirement fund is required, regardless of how much you make.

Effect of Age on Retirement Savings

Age is another critical factor when it comes to retirement savings. Experts suggest that the earlier you start contributing to a retirement savings account, the better off you will be, thanks to the power of compounding interest.

However, there is still hope for those who started late in the game. A recent report published on Forbes suggests that while starting young is ideal, individuals who start saving for retirement in their 30s can still make a massive impact on the amount of money they have at retirement.

The earlier in life you start saving, the more time you have to take advantage of compound interest and investment returns. Starting early and contributing consistently will help build a strong foundation, and every dollar saved in your twenties and thirties will generate more wealth than dollars saved in your forties and fifties.

Investment Habits of Millennials

Aside from income and age, a third factor that can make a difference in retirement savings is investment habits. While millennials have grown up in a technological age, their investment strategy has often been traditional.

With the rise of online brokerages and robo-advisors, this trend is slowly changing. Studies show that millennials are more comfortable with technology than prior generations, so it follows that more will be investing in non-traditional ways.

A 2018 study by Financial Engines found that millennials were more likely to have personal brokerage accounts than baby boomers. Investing can be a complex topic, and one should never use “playing the stock market” as a strategy without research and knowledge.

Nonetheless, investing can be an excellent way to grow retirement savings over time, with potentially higher yields and returns compared to savings accounts. What Can Millennials Do to Improve Their Retirement Savings?

Considering the state of millennial retirement savings, it is critical that younger generations begin to take adequate steps towards their financial future. Firstly, it is wise to develop a plan that takes into account how much you will need to retire comfortably, and then assess your savings rate and investment allocations.

Secondly, millennials should try to tackle any outstanding debt as soon as possible. Paying off debt will free up more money to put towards retirement savings, as well as help create a financially sustainable lifestyle.

Thirdly, it is necessary to start saving early and allow for the power of compounding interest to work in your favour. Therefore, make sure to establish a retirement savings account as soon as possible, and contribute consistently.

Lastly, millennials must consider diversifying their investment portfolio. Breaking away from traditional investment options and incorporating index funds, target-date funds, and other options can provide higher returns and the potential for greater yields.

In Conclusion

Millennials have a lot of catching up to do when it comes to saving for retirement. It is crucial that individuals in this generation understand the importance of creating a financially sustainable future.

By addressing factors such as income, age, investment habits, and implementing practical strategies, millennials can improve their retirement savings and lead a comfortable lifestyle later on in life. Investment Preferences: The Most Common Sectors for Millennials

When it comes to investing, millennials have their own preferences and strategies that distinguish them from previous generations.

While some may still perceive younger generations as being adverse to investing, studies show that millennials are giving serious thought to their future financial security and are turning towards various sectors to help them achieve their goals. In this article, we delve into the most popular sectors that millennials invest in and why that might be the case.

Financial Stock

Despite the economic collapse of 2008, financial stocks remain popular among millennials as an investment option. Financial stocks represent a significant part of the U.S. equity market and include companies such as banks, insurers, and brokerages.

The appeal of financial stocks to millennials may be due to the fact that banks and financial institutions are known for generating high yields and strong dividends. Additionally, financial stocks might be an attractive sector because of the increasing adoption of financial technology.

New financial technology companies (FinTechs) have come onto the scene, offering products and services that traditional financial institutions can’t match. In contrast to older customers, millennials have demonstrated a willingness to try digital-only banks and other financial services.

This open-minded attitude towards new technologies has tailored the financial industry to look like something that caters more to the millennial customer.


Technology is another popular sector among millennials when it comes to investing. Although not all technology companies are created equal, the sector has enjoyed great growth since the early 2000s.

Companies such as Apple, Amazon, Microsoft, Google, and Facebook dominate the stock exchange, and many of them have consistently done well year after year. While the sub-sectors of the industry may vary, the driving force behind the industry’s popularity among millennials is the tangible benefit of technological innovation.

Younger people increasingly rely on technology for their daily lives. Social media platforms, streaming services, and eCommerce retailers are now indispensable to many people’s routines.

Investing in those companies that they know and use frequently can be a powerful incentive. The technology sector is highly unpredictable and volatile due to growing competition, and therefore, may not be ideal for risk-averse investors.

The risks should always be balanced with an understanding of why a technology stock may be attractive. One’s investment in technology should depend on a thorough understanding of the technology market and a willingness to remain engaged with it over time.


The healthcare industry is another sector popular among millennials for investments. The healthcare industry can be divided into several sub-sectors such as medical technology, pharmaceuticals, and healthcare facilities.

Despite the potential volatility that comes with investing in healthcare, millennials believe that there is money left to be made in the industry. The primary reason healthcare is attractive to millennials is that it is a segment that is expected to experience consistent growth in the future.

As the population ages, there will be an increased demand for pharmaceuticals and medical care. Additionally, healthcare technology is now incorporating advanced artificial intelligence in diagnostics, and automation in hospitals and clinics.

This represents an opportunity for startups and emerging companies to enter this space and innovate the way healthcare is delivered, and millennials are keen to invest early. Moreover, improvements in medical research and treatment, as well as the prevalence of chronic diseases such as cancer, diabetes, and Alzheimer’s disease, provide ample opportunities in an array of healthcare sectors.

Thus, healthcare stocks have a potential for long-term returns.

Best Ways to Invest in These Sectors

Investing in a sector or sectors as mentioned earlier requires careful analysis to determine the best investment strategy. One approach is by utilizing exchange-traded funds (ETFs) and mutual funds, which offer greater diversification in industry immersion.

This way, investors can put a portion of their money into exchange-traded funds and mutual funds for exposure to a broader array of stocks within that particular sector. Another way is by investing directly in a company’s shares through a brokerage account.

This approach offers maximum autonomy and flexibility to customize and maintain one’s portfolio however way they deem fit. This approach can involve individual stock selection on the NYSE, NASDAQ, or other exchanges worldwide.

The Bottom Line

Investing in the financial stock, technology, and healthcare sectors can be an exceptional opportunity for millennials. However, one must ensure to approach each sector with thoughtful consideration and awareness of the risks involved and what kind of returns can be expected.

Strategic asset allocation, diversification strategy and using a mix of individual stocks and exchange-traded funds are capable of reducing certain risks while ensuring the returns stay positive in the long term. With dedication, patience, and know-how that can come from research and seeking advice from a financial advisor, millennials can build a sizeable nest egg over time, giving them the financial freedom they desire.

In conclusion, investment preferences among millennials are shifting towards various sectors, including financial stock, technology, and healthcare. These sectors provide attractive investment opportunities, primarily driven by projected future growth.

However, millennials must approach the sectors with considered analysis to limit risks and ensure positive, long-term returns. Utilizing exchange-traded funds, mutual funds, and investing in individual stocks are some of the ways millennials can optimize their investment portfolio.

Ultimately, investing early and consistently, along with seeking professional financial advice, can have a substantial impact on their future financial security. Millennials must seek financial knowledge to make informed investing choices and take deliberate steps to achieve their financial goals.

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