Millennials Say They’ll Never Retire – Is That Realistic?

Right now, a large portion of baby boomers are finding out how difficult it is to save enough for retirement. Their incomes aren’t high enough to put as much money away as they should, their investments aren’t yielding much of a return, and Social Security is projected to run out within the next couple of decades, reducing the amount of money they can count on from the government.

If things are this bad now, they’re likely to be even worse by the time the younger generation reaches retirement age. How do millennials—those who will turn 20 – 36 this year, and now a larger demographic than baby boomers, intend to deal with the situation?

They don’t. Around 83% of millennials plan to keep working, even after retirement age. Interestingly enough, that’s also the percentage of current retirees who aren’t working at all. Those two statistics are a good illustration of the difference in outlook between the younger and older generation. The question is, though, is this course of action viable, for millennials to keep working their whole lives? Probably not.

Possible Reasons for Continuing to Work

The 83% figure comes from a survey by Merrill Edge on financial concerns of the average American. While it didn’t explicate the reasons why millennials plan to keep working, there are a couple of possibilities.

First, there’s the concept of loving what you do, so that you don’t feel like you need to retire in order to be fulfilled. There’s also the looming dread of what retirement planning will entail, particularly in the current economic climate. Coming of age professionally during the Great Recession, many are barely making ends meet as it is, and feel like they won’t be able to put away enough by retirement age to sustain themselves. Therefore instead, they’ll have to continue working at least part time in order to live.

It is likely millennials will end up working for longer than their parents and grandparents did. The current age to collect full Social Security benefits is 66; for Americans born after 1960, it’s 67. Given that life expectancies are increasing, and that the Social Security trust fund is about to run out, it’s doubtful that will still be the standard retirement age forty years from now, as millennials start to wind down their careers. If Social Security still exists then, benefits may well not kick in until age 70 or 75. However, there’s a big difference between continuing in your job for a few extra years, and working until you die.

The Problem with the “Plan”

Many people, even today, find that they would rather continue working past retirement age, even if they transition to a part-time job in their golden years to extend their income. The problem, though, is that many millennials are assuming that, because they intend to maintain an income forever, they don’t need an actual retirement plan, or at least not much of one.

It’s easy to say, while you’re in your twenties, that you plan on working forever. However, once you reach your sixties, you may find a lot has changed. As you age, there may be health issues or other physical limitations that keep you from continuing at your current job. You may decide to look for part-time work, only to find it more difficult than you anticipated. You might even find, after 40 or 50 years in the workforce, that you actually do want to retire after all, and spend your days fishing or playing golf. However, if you don’t have a retirement fund built up, you won’t be able to do it.

Even for Americans who are planning for their retirement, it often seems to be seen only as a vague concept. More than half of those surveyed said they didn’t anticipate needing more than $1 million in their retirement fund, and 19% said they had no idea what amount they actually would need. $1 million seems like a lot, but given inflation, and the amount of time it needs to last, it may well not be enough to sustain a millennial through their golden years.

If millennials are able to continue working and earning comfortably, without having to retire, then more power to them. However, it’s foolish to rely on that possibility as one’s entire retirement plan. As those of us over forty can tell them, you never know what might happen in the meantime. It’s vital to have a nest egg built up, so that you’re ready for the future, no matter what it may bring.