I’m a Millennial Planning for Retirement: Here’s How I Am Doing It
As the cost of living continues to rise, individuals of all generations are contemplating what retirement might entail and where they may need to economize to ensure a fulfilling retirement without compromising their financial security. To gain insights into where millennials are planning to reside during retirement and the financial objectives they’re pursuing, GOBankingrates interviewed two millennials about their retirement plans.
Millennials’ Retirement Destinations
A recent survey by GOBankingRates revealed that 43% of Americans have already relocated or believe they will have to move to afford retirement. Within this group, 47% of millennials ages 25 to 34 and 45% of those ages 35 to 44 share this concern.
Both Christopher Stroup and Fred McGill find themselves among this demographic.
Stroup, a certified financial planner at Abacus Wealth Partners, intends to establish his primary residence in his hometown in Pennsylvania.
“The cost of living is vastly cheaper than where I currently live in California,” Stroup said. ” The same can be said about the savings on taxes that will result from moving from CA to PA. Equally important, it’s where most of my family still resides. Having a familial unit close by in retirement (whether biological or chosen), is so critical to longevity and happiness at this stage of life.”
For McGill, finance expert and co-founder of Simple Showing, a tech-powered brokerage that helps people save money on buying or selling houses, the allure of a smaller and more affordable town in the Midwest was undeniable. He cited the lower cost of living, improved quality of life and proximity to family as driving factors for his decision.
“The Midwest’s lower cost of living means my retirement savings will stretch further, allowing me to maintain a comfortable lifestyle,” McGill said. “I’ve always enjoyed the slower pace of life in smaller towns. The sense of community and the availability of outdoor activities like hiking and fishing make it an ideal choice for me. Living in the Midwest allows me to stay connected with loved ones without the high expenses associated with big-city living.”
Their Retirement Savings Goals
When it comes to retirement savings, millennials like Stroup and McGill aim to secure financial freedom and flexibility to relish their golden years without financial constraints.
“I’m saving for work optionality,” Stroup said. “The point where I no longer have to work for work’s sake, but I have complete control over the work I say yes to while being inoculated from the financial repercussions of saying no to as much work as I want. My retirement is about locking in a lifestyle that I will be comfortable with throughout my retirement years.”
For McGill, he’s prioritizing building a well-rounded savings portfolio to savor a fulfilling retirement filled with travel and leisure.
“I contribute consistently to my 401(k) and invest in low-cost index funds to ensure I have a comfortable nest egg when I retire,” McGill said. “Healthcare costs can be a significant burden, so, I’ve been setting aside money in a Health Savings Account (HSA) and researching supplemental insurance options. I want to explore the world and enjoy my retirement to the fullest. Setting aside a separate fund for travel and leisure activities is essential for me. Life is unpredictable, and having an emergency fund gives me peace of mind. I save at least six months’ worth of living expenses to cover unexpected situations.”
Strategies for Achieving Their Goals
Stroup adopts a diversified approach to secure work optionally in retirement.
“First, I prioritize savings in retirement vehicles, maximizing my 401(k) annually ($22,500 in 2023) and executing a backdoor Roth IRA each year ($6,500 in 2023),” Stroup said. “I also leverage my Health Savings Account (HSA) by investing my contributions, maxing out this account annually ($3,850 in 2023 for a single participant plan). Any remaining savings are directed toward my taxable brokerage account.”
For McGill, meticulous budgeting, automated savings, debt management and prudent investments are now the cornerstones of his retirement savings strategy.
“I create and stick to a detailed budget that accounts for all my expenses,” McGill said. “This helps me identify areas where I can cut back and allocate more money towards savings. Setting up automatic transfers to my savings accounts ensures consistent savings without having to think about it. I prioritize paying off high-interest debt to free up more money for savings.”
While the retirement plans of millennials like Stroup and McGill provide valuable insights, remember that your retirement plan is highly personal. Ultimately, the path you choose to navigate your golden years is a reflection of your unique aspirations and circumstances.
“Planning for retirement as a millennial involves making thoughtful choices about where to live and setting clear financial goals,” McGill said. “By living in an affordable location, saving diligently, and investing wisely, I hope to achieve a comfortable and fulfilling retirement when the time comes.”
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