Wednesday, 26 October 2022

Millennials want to leave their job by age 50 | You will have to save at least 50% of your income

I saw this article published in Straits Times mentioning that many millennials wants to retire in their 50s or as you always hear, to FIRE in their 50s, not get fired. In the article, a certified financial advisor evaluated the goals of the millennials and said it is tough as they will need to save around 50% to 60% of their salary which is rather difficult in times of rising costs.

 The article highlights that millennials will need to tighten their belts in order to reach their financial goals, giving up vacations or restaurants visits as saving 50% to 60% of their salary is a big feat. These are the aspirations and expectations to be able to retire by 50 but in reality, a retirement consultant and financial well-being leader points out that it is impossible for most millennials as they found that 36% save less than 5% of their salary and 26% have taken a loan against their state pension fund.

Another insights survey done in 2022 by Teachers Insurance and Annuity Association of America showed that a huge proportion of millennials are confident in their ability to plan for retirement with 31% of individuals aged 30 to 39 suggesting they have an above-average level of confidence in their ability to plan for retirement. Young millennials, those 25 to 29, are the most assured: 40 per cent said they had an above-average level of confidence in their ability to plan. But the experts say that their savings rate don’t match up😟

Will I be able to retire by 50?

I don’t plan to retiring early but I am aiming to be financially free by a certain age. I am within the age range of 25 to 30 and have to admit that I am so far confident in my ability to plan for retirement. Retiring at 50 years old is definitely not easy I would say, in that it is just about 20 plus years away for me and definitely commitments would build up during this 20 plus years.

However I would say that I feel confident because currently I do not have much commitments and am saving/investing a portion of my salary although not 50%. If I were to have a mortgage or more commitments in future coupled with the lower stability of having a job as I grow older, I would be less confident about my retirement and whether I can take it easy when I am older.

Thinking about the future can bring anxiety as it is uncertain and there are so many possibilities. I do have a goal in mind but I know it will take time and effort, definitely requires luck as well.

Mindset shift for Millennials and Gen Z

For our parents, early retirement was never seen to be an option as work helped provided for their family and they would like to work for as long as possible, even for some, financially free was not even thought of as they were living pay-check to pay-check to provide for their kids and to pay the bills. They worked tirelessly mostly till their 60s or until they are no longer able to.

Millennials and Gen Z are not looking at that, most of us are lucky enough to have sufficient allowances from our parents when we were studying and after working, we are earning salaries that allow us to save and invest which is a huge privilege in today’s world. Even more so if your parents managed to save or build up a retirement nest that means you do not need to be their retirement plan.

But even so, with high costs of living and great uncertainty for the future, it is tough to have kids and at the same time get a property and be able to FIRE at 50 unless your income is higher than average and you manage your finances well. Millennials and Gen Z are placing more emphasis on their mental well-being with many forgoing children or even getting attached so we don’t really know how the future will be but it is good to have goals and aim to achieve them.

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