Study: Millennials Need at Least $1.6 Million to Retire

What's Hot


How to Cut the Cable TV Cord in 2017Family

8 Major Freebies and Discounts You Get With Amazon PrimeSave

Study: People Who Curse Are More HonestFamily

8 Creative Ways to Clear ClutterAround The House

15 Things You Should Always Buy at a Dollar StoreMore

Pay $2 and Get Unlimited Wendy’s Frosty Treats in 2017Family

5 Reasons to Shop for a Home in DecemberFamily

This Free Software Brings Old Laptops Back to LifeMore

Should You Donate to Wreaths Across America? A Lesson in Charitable GivingAround The House

6 Reasons Why Savers Are Sexier Than SpendersCredit & Debt

Resolutions 2017: Save More Money Using 5 Simple TricksCredit & Debt

10 Free Things That Used to Cost MoneyAround The House

7 New Year’s Resolutions to Make With Your KidsFamily

10 Simple Money Moves to Make Before the New YearFamily

The 3 Golden Rules of Lending to Friends and FamilyBorrow

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: 6 Ways to Make Cheap Foods Taste Delicious

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 1,883 more deals!