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Saving for retirement is harder for millennials than it was for their parents and grandparents.

They entered the workforce during one of the worst recessions in history. They have more student debt than previous generations. With all the odds stacked against them, is there any way millennials can ever retire? Research suggests yes.

A surprising 27 percent of millennials have more than $100,000 set aside for their golden years, says a study from market research company J.D. Power. [1] That’s with 30-35 years left to save. Three-quarters of baby boomers have the same amount saved with retirement approaching in only a few years.

Let’s take a look at the efforts they’re putting in, and how their generation compares to those of yore…

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How millennials are saving for retirement

Pensions and other defined benefit retirement plans are near-nonexistent. So millennials need to self-fund a large portion of their retirement. But it seems like they’re paying attention.

In fact, most millennials are saving for the future. Only 37 percent aren’t, according to a study from LendEDU. [2] Millennials save an average of $480 a month in a nest egg — that’s $5,760 a year. If they saved that much for seven years, they’d have more than the average Gen Xer — $35,000.

Roughly the same number of millennials as their older counterparts work at a job that offers 401(k) or 403(b) plans.

However, a disproportionate amount are eligible to participate in a plan, according to a report from the National Institute on Retirement Security. [3] Here’s how that breaks down…

Works for an employer who offers a retirement plan

  • Baby boomers: 67.6 percent
  • Gen Xers: 68.8 percent
  • Millennials: 66.2 percent

Eligible to participate in a work-sponsored retirement plan

  • Baby boomers: 79.8 percent
  • Gen Xers: 77 percent
  • Millennials: 55 percent

On the bright side when millennials are eligible, they save at near the same rates as everyone else…

Participates in a retirement account when eligible

  • Baby boomers: 94.4 percent
  • Gen Xers: 95.4 percent
  • Millennials: 94.2 percent

Millennials are also known to put off major life events like buying a home, getting married, or having children to save for retirement.

Far more millennials (90 percent) say they would name saving for retirement as their main goal than those that would prefer raising a family (40 percent), says a study from retirement planning company Principal. [4]

Despite all their efforts, many are still skeptical if they’ll be able to retire…

How millennials view retirement

Millennials may be far from retirement, but they talk about it more than everyone older than them.

Millennials are more likely to discuss retirement plans in their relationships than baby boomers and Gen Xers, according to insurance company Lincoln Financial Group. [5] That could be due to how much they worry about saving enough.

Close to a quarter (21 percent) of millennials worry about their retirement security, and 47 percent feel they won’t be able to retire when they want to. That raises the question: where does the stress stem from?

Many millennials came of age during the Great Recession and watched their parents struggle to save for retirement. As a result, millennials have realistic fears about having enough to live on when they stop working.

Fifty-six percent fear that Social Security won’t be available when they’re of age, says a study from HSBC bank. [6] Furthermore, 82 percent predict healthcare costs will continue to increase.

To combat all these challenges millennials have no choice but to self-fund a huge portion of their retirement through work-sponsored plans, investing, and independent retirement accounts, says a study from TransAmerica Center for Retirement Studies (TCRS). [7]

They’re stressed to the point that twice as many millennials would rather save for retirement (90 percent) than start a family (40 percent), says a study from Principal, a retirement planning company. [8]

But millennials who are saving may not need to worry so much. TCRS says if they stay the course, things will work out.

“Millennials are doing a great job saving for retirement,” the TCRS study says. “By learning about investments and through careful planning, many may be well-positioned to achieve a comfortable retirement.”

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Millennials’ retirement savings compared to older generations

Gen X is sometimes known as the “sandwich generation” because many are saddled with the problems of the surrounding generations. They’re caring for their kids who are getting older and living at home longer and their aging parents.

Half of this age group fears not being able to retire when they want, yet only 9 percent say that “saving for a more comfortable retirement” is the most important piece of financial advice to follow. [9]

But baby boomers don’t consider retirement their biggest financial concern. They’re generally less worried about money than younger generations, except not having an emergency fund. That’s their top financial concern.

Then there’s the issue of those who haven’t yet saved for retirement. These people typically fall into two categories: They don’t really understand how expensive the cost of living actually is, or they’re afraid there is no way to handle the costs. Those in the second category typically plan on working as long as possible and hope Social Security will be enough.

How millennials can save for retirement

Retirement seems so far off, but you should still start saving as soon as possible. Here are some tips on how to bolster your nest egg.

1. Start saving now

Cut your living costs as much as possible now to start putting more toward your retirement savings. That money will sit in you account and generate compound interest over the years — meaning the longer it’s in the account, the more money you’ll make. So start now.

2. Contribute to a 401(k)

The company you work for may offer a 401(k), or similar workplace retirement savings account, that you can contribute to. The money will come directly out of your paycheck and into the account, which you can access without tax penalty at age 59 ½.

They may also offer a financial incentive with a match to your 401(k) contributions. That means they’ll add a certain percentage of the amount you contribute. Try your best to contribute the highest amount your employer will match you on. That way you can save as much as possible for retirement.

3. Contribute to an IRA

Not everyone has access to a 401(k). If you don’t, consider opening an Individual Retirement Account (IRA) with your local financial services firm, or find one online. You can open one even if you already have a work-sponsored plan.

Unlike a 401(k), you’ll need to transfer the money from your checking or savings account on a regular basis.

4. Build up an emergency savings fund

One huge threat to your retirement savings is needing money in a financial emergency. If and when a situation occurs, it would be a shame to need credit to bail you out of a tight spot.

Having money set aside specifically for emergencies will help you from going into debt or taking a penalty for withdrawing early from your 401(k).

Save any extra money you make. Add it to an emergency savings fund to make sure you’re prepared for something unexpected, like losing your job, medical bills, or even divorce.

For more information on retirement savings, visit Debt.com’s how-to guide to save for retirement.

Cameren Boatner contributed to this report. 

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About the Author

Joe Pye

Joe Pye

Joe Pye is a certified debt management professional. He served as Editor-in-Chief of Florida Atlantic University’s student-run newspaper, the University Press. He was a finalist for the Mark of Excellence award by the Society of Professional Journalists Region 3 for feature writing and in-depth reporting. He now covers personal finance topics for Debt.com uncovering trends that help readers deal with the financial world. He graduated with a bachelor’s degree in multimedia journalism from Florida Atlantic University.

Published by Debt.com, LLC