Study: Millennials Need at Least $1.6 Million to Retire

What's Hot

23 Upgrades Under $50 to Make Your House Look AwesomeAround The House

Trump Worth $10 Billion Less Than If He’d Simply Invested in Index FundsBusiness

Do This or Your iPhone Bill May SkyrocketSave

11 Places in the World Where You Can Afford to Retire in StyleMore

19 Moves That Will Help You Retire Early and in StyleFamily

What You Need to Know for 2017 Obamacare EnrollmentFamily

8 Things Rich People Buy That Make Them Look DumbAround The House

50 Ways to Make a Fast $50 (or Lots More)Grow

32 of the Highest-Paid American SpeakersMake

The 35 Two-Year Colleges That Produce the Highest EarnersCollege

5 DIY Ways to Make Your Car Smell GreatCars

Amazon Prime No Longer Pledges Free 2-Day Shipping on All ItemsMore

More Caffeine Means Less Dementia for WomenFamily

7 Household Hacks That Save You CashAround The House

5 Reasons a Roth IRA Should Be Part of Your Retirement PlanGrow

30 Awesome Things to Do in RetirementCollege

Beware These 10 Retail Sales Tricks That Get You to Spend MoreMore

9 Tips to Ensure You’ll Have Enough to RetireFamily

If you're part of the generation born between the early 1980s and early 2000s, this is depressing. But there are lessons to take heart from.

I thought NerdWallet’s retirement expectations for millennials were gloomy. Personal Capital’s didn’t make me feel any better.

NerdWallet’s analysis concluded that the average member of Generation Y will retire at age 73. Personal Capital says it’s possible for millennials — who account for a quarter of the population — to retire at 65. That is, if they have $1.6 million (in 2013 dollars) in the bank. Or they can retire at 75 with just a million.

Of course, Personal Capital makes a lot of assumptions and freely admits its analysis could be blown up, for better or worse, by any number of unpredictable factors. So let’s unpack a few of its ideas:

  • The hypothetical millennials its numbers are based on are a 30-year-old married couple with $20,000 saved already and a savings rate of $5,000 per year.
  • They hope to spend $100,000 a year in retirement. (Sounds nice.)
  • They expect $40,000 in yearly Social Security benefits.
  • Personal Capital assumes their investments, prior to retirement, will grow 6 percent per year after accounting for inflation.

In this scenario, it takes the couple until they are 68 to save $1 million, but that’s not enough. “Our 30-year-olds would run out of money by the time they reach 84 (before their life expectancy of 86 and 89, respectively, for him and her),” Personal Capital says. If they retired at 65, they would be out of money by age 80.

The easiest fix here is to reduce the $100,000 a year they plan to spend. “You can move away from this notion of ‘depleting’ your portfolio if you set a target spend level that is lower than the yield on your portfolio,” Personal Capital says. “Spending less than you make is not a bad rule of thumb.”

Real estate and other investments could also make things go better. And, of course, we have a lot of other ideas.

You may or may not agree that Personal Capital’s scenario is realistic, but the takeaways seem reasonable:

And either way, hopefully it can scare some people into action. Got other retirement advice for millennials? Comment below or on our Facebook page.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!


Read Next: Sam’s Club Reveals Details of Black Friday, 5 Other Holiday Sales

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,715 more deals!