A recent study reveals a worrying trend: 60% of millennials and Gen Z have less than $5,000 saved for retirement.  This alarming statistic highlights a growing concern about the financial stability of younger generations as they approach retirement age. With 66% of millennials not saving at all, a shift in mindset and financial planning is crucial.

The lack of retirement savings among America’s youth reveals an urgent need for greater financial literacy and accessible retirement planning tools to help address the looming retirement crisis.

The Challenge for Younger Generations

Millennials and Gen Z face unique challenges when it comes to saving for retirement. These generations entered the workforce during times of economic uncertainty, with many burdened by rising student loan debt and stagnant wages. The rising cost of living and the pressure to keep up with lifestyle trends can further strain their ability to save.

Steps You Can Take Now

Building a more secure financial future is a multifaceted effort that requires both education and resources. The key is to start as early as possible. Below is a list of foundational steps you can get on a path toward a stable retirement.

  • Attend a financial literacy seminar – Led by MFS President and CEO Thomas Rudzewick, our financial literacy seminars are great opportunities to learn the fundamentals of saving, budgeting, cybersecurity, and building credit.  Reach out to finlit@maspethfederal.com to request a financial literacy seminar at your school or program.
  • Adopt an enterprising mindset – Gen Zers are no strangers to working multiple jobs. Get more ideas on how to earn extra cash by reading our article outlining 7 Ways College Students Can Earn Money in NYC.

We also offer several types of accounts to help you shift your savings into high gear:

  • Open a Certificate of Deposit (CD) – A CD gives you an annual percentage yield (APY) of compounding interest on the amount you have in your account. So, the more you put into the account, the more you earn.
  • Open a Traditional IRA – Make pretax contributions to this type of account, which has the added savings benefit of lowering your taxable income.
  • Open a Roth IRA – You can contribute to this account after taxes, so you do not have to pay when you withdraw it during retirement. Your investments also earn interest on dividends.

Lastly, if available, make sure you are tapping into your workplace benefits:

  • Open a 401K – Take advantage of your employer’s retirement offering and potential to match your pretax contributions.
  • Open a Simplified Employee Pension (SEP) – If you are a freelancer or sole proprietor, you could be eligible to open a SEP, which helps you save for retirement beyond what an IRA can offer.

It is not too late.

The good news is it is never too late to focus your attention on saving for retirement. By utilizing available financial tools, learning good habits, and taking advantage of employer-sponsored retirement plans, younger generations can take meaningful steps to build their financial future.

Retirement may seem far off for Millennials and Gen Z, but the sooner they start saving, the better prepared they will be for a financially secure future. By taking proactive steps, utilizing available resources, and seeking professional guidance, younger generations can overcome these challenges and build a solid foundation for their retirement years.