4 Ways Retirement Could Be Different for Millennials Than It Was for Boomers
Written by
Marc Guberti
Edited by
Molly Sullivan
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The only constant is change, and millennials may have different retirement lifestyles than baby boomers. Knowing the potential changes can help millennials plan accordingly and assess their options.
While changing retirement trends may impact many millennials, individuals can evaluate these trends and determine whether they align with their desired lifestyles. Preparing now will provide more possibilities. Here are some ways retirement may be different for millennials.
Possible Reductions in Social Security
Firstly, Social Security has long relied on employee contributions to fund payments for retirees. However, fertility rates have been below replacement levels for over a decade. That means that as millennials age, there will likely be fewer young workers to replace them when they retire. The Social Security Administration has warned that “minimal changes in fertility significantly affect the contribution rate necessary to finance a pay-as-you-go Social Security system.”
This trend is already taking shape in much of the world and is expected to become more pronounced as baby boomers pass away. Fewer workers supporting a growing retired population could put more pressure on Social Security and force significant changes. While the Department of Government Efficiency (DOGE) may uncover enough fraud to improve Social Security’s solvency, declining fertility rates remain a considerable force that could negatively impact the program.
Millennials May Have To Work Longer
According to Time magazine, the rising cost of living has already prompted many people to work well past retirement age. Some retirees have even returned to work after several years to make ends meet.
Side hustles can make working longer easier by providing more flexible, part-time employment options.
While many baby boomers have also extended their careers instead of retiring, this trend may accelerate for millennials as wage growth continues to lag behind rising expenses.
Fewer Millennials Will Have Home Equity
Housing prices have soared well beyond wage growth rates, forcing many millennials to rent instead of purchasing homes. While millions of homes were built annually between 1975 and 1980, housing production has slowed and has not kept pace with population growth.
According to HousingWire, most baby boomers were able to buy their first homes between ages 25 and 34. However, The Zebra, an insurance company, reports that the average first-time homebuyer’s age has recently risen to 36, the highest since data tracking began. If millennials take longer to buy homes, they will have less time to build equity and some may never become homeowners.
There is speculation about a potential “silver tsunami” — a surge in available housing as baby boomers downsize or pass away. However, this remains uncertain, as many boomers may choose to pass properties on to their children rather than listing them on the open market.
Less home equity is a significant issue for retirees, as it limits their ability to use options like home equity lines of credit (HELOCs) and reverse mortgages to fund their retirement.
Multigenerational Households May Become More Common
Housing isn’t the only rising expense — assisted living facilities have also become costly. As a result, families may opt to live together rather than use assisted care. SeniorLiving.org reports that some assisted living facilities charge more than $5,000 per month. Sharing a home allows families to save money and this approach may be more common among millennials than among boomers.
Multigenerational households have been increasing in recent years. A study by Lombardo Homes found that approximately 55% of Americans live in multigenerational homes. Rising costs and a growing number of young adults remaining single may accelerate this trend.
Overall, millennials face unique challenges when it comes to retirement planning. With potential reductions in Social Security, longer working years, lower homeownership rates and the rise of multigenerational living, financial strategies will need to evolve. Understanding these trends now can help millennials make informed decisions about their futures.
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