Retirement Savings: These 7 Things Are Keeping Millennials From Saving for Retirement

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Retirement planning is an important aspect of financial well-being, yet many millennials find themselves grappling with obstacles that hinder their ability to save for the future. A recent survey conducted by Goldman Sachs sheds light on the challenges faced by more than 5,000 individuals across various age groups.

Here’s a look at the survey results and what it revealed about the key factors preventing millennials from prioritizing retirement savings. From credit card debt to caring for family, understanding these barriers is essential in developing strategies to overcome them.

Credit Card Debt

A significant hurdle for millennials on the path to retirement savings is the burden of credit card debt. With 73% of millennials citing this as a major concern, the challenge lies in managing high-interest debt that can impede the ability to allocate funds toward long-term savings. Addressing credit card debt through strategic financial planning and budgeting is crucial. Millennials are encouraged to explore debt repayment strategies and adopt responsible spending habits to alleviate this barrier.

Paying Down Existing Loans

For 75% of millennials, existing loans pose a substantial obstacle to saving for retirement. Whether it’s student loans, car loans, or other forms of debt, the need to fulfill monthly obligations limits the amount available for retirement contributions. Developing a systematic approach to loan repayment can free up resources for retirement savings. Creating a comprehensive repayment plan and exploring refinancing options can help manage existing loans more efficiently.

Saving for College

A significant 67% of millennials face the challenge of balancing retirement savings with the financial responsibility of saving for their children’s education. With this number of millennials expressing concerns about college savings, finding a middle ground becomes imperative. Striking a balance between saving for college and retirement involves careful financial planning. Establishing dedicated education funds, exploring scholarship opportunities, and considering education savings plans are key strategies to navigate this challenge.

Caring for and Financially Supporting Family

The responsibility of caring for or financially supporting family members, whether parents or siblings, is a prevalent concern for 76% of millennials. Balancing these familial obligations with retirement savings requires thoughtful consideration. Open communication within the family about financial responsibilities is crucial. Millennials may need to explore options such as setting clear boundaries, seeking financial assistance programs, and fostering financial independence among family members.

Time Out of the Workforce

Taking time out of the workforce, whether for personal reasons or caregiving, impacts 70% of the average millennial’s ability to contribute consistently to retirement savings. Planning for career breaks is essential. Establishing emergency funds, exploring part-time work during breaks, and maintaining career connections can mitigate the financial impact of time out of the workforce.

Financial Hardship

Unforeseen financial hardships, such as medical expenses or unexpected home repairs, present challenges to retirement savings for 78% of millennials. Dealing with immediate financial needs often takes precedence over long-term planning. Building an emergency fund is crucial to weathering financial hardships without compromising retirement savings. Creating a safety net can provide the necessary buffer during challenging times.

Too Many Monthly Financial Expenses

A staggering 82% of millennials struggle with an excess of monthly financial expenses, leaving limited room for retirement contributions. Managing numerous financial obligations poses a significant barrier to saving for the future. Prioritizing essential expenses and trimming non-essential costs are key strategies. Creating a detailed budget, negotiating bills, and identifying areas for cost-cutting can help millennials allocate more funds to retirement savings.

Bottom Line

Understanding the multifaceted challenges that millennials face in saving for retirement is the first step toward developing effective strategies. As this survey highlights, addressing credit card debt, managing existing loans, and navigating family obligations are some of the ways millennials can foster a secure financial future. By acknowledging and proactively addressing these barriers, millennials can pave the way for a more robust retirement savings journey.

Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.

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