Retirement Perspectives: The Millenials

 Millennials (born 1979 to 2000) are the youngest and largest generation in the workforce. They are also a do-it-yourself generation of retirement savers. Millennial workers most frequently cite self-funded savings (55 percent) as their expected primary source of retirement income, including 43 percent expecting to rely on income from 401(k)s, 403(b)s, and IRAs and 12 percent from other savings and investments. Just 17 percent are expecting Social Security to be their primary source of income when they retire.

Millennials have heard the word that they need to save for retirement. Seventy-two percent of Millennial workers have started saving –and at the young age of 22 (median). Among those who are offered a 401(k) or similar plan, 72 percent participate in the plan and contribute seven percent (median) of their annual pay. An impressive 30 percent contribute more than 10 percent of annual pay. The total household retirement savings among Millennials is $31,000 (estimated median).

Millennials can do more to improve their retirement outlook by learning about investing. Seventy-two percent agree that they do not know as much as they should about retirement investing. Among those currently participating in a 401(k) or similar plan, one in four are “not sure” how their retirement savings are invested. Another 22 percent indicate their retirement savings are invested mostly in bonds, money market funds, cash, and other stable investments, thereby suggesting that they may be investing too conservatively given their long-term investing horizon until retirement.

Hungry for more education, most Millennials (75 percent) say they would like more information and advice from their employers on how to achieve their retirement goals. Of the three generations, Millennials are most likely to find digital technologies offered by their retirement plan providers to be helpful, including 80 percent who find mobile apps for managing their accounts to be helpful (compared to just 48 percent of Baby Boomers).

Surprisingly, Millennials have also made retirement a topic of conversation. The survey found that 22 percent of Millennial workers frequently discuss saving, investing, and planning for retirement with family and friends, which is more than twice as many as Generation X and Baby Boomer workers (both 10 percent).

Millennials are doing a great job saving for retirement. By learning about investments and through careful planning, many maybe well-positioned to achieve a comfortable retirement.

Perspectives on Retirement: The Boomers

As I have said many times we (Boomers) are writing new retirement rules. Sixty-six percent plan to or already are working past age 65 or do not plan to retire at all – and many expect to continue working in retirement, at least on a part-time basis. Plus, Boomers are paving the way for future generations by challenging employers to accommodate a flexible transition into retirement.

Most of us who plan to continue working say it’s because we need the income or in the US they need the health benefits provided by their employer. However, Baby Boomers’ vision of a flexible transition into retirement may prove difficult. Many employers do not yet have business practices in place to accommodate our need for a flexible transition into retirement.

We are confident (87% believe) that Social Security will be a source of our retirement income and one in three (34 percent) expects it to be their primary source of income. One-third (33 percent) are expecting income from a traditional pension plan, while most (78 percent) from 401(k)s, 403(b)s, IRAs and other savings and investments.

The current household savings in all retirement accounts among Baby Boomer workers is $147,000 (estimated median). It should be noted that many Baby Boomers were already mid-career when 401(k) plans were first introduced. Therefore, they have not had a full 40-year time horizon to save in 401(k) plans.

Working longer and fully retiring at an older age is a common-sense solution for mitigating retirement savings shortfalls. Baby Boomers’ vision can only be achieved if they are proactive about staying employable and if employment opportunities are available to them. A majority of Boomers says they are staying healthy (67 percent), while 56 percent are performing well at their current job and 40 percent are keeping job skills up to date.

As part of our retirement planning, Boomers should, the report by TransAmerica suggests, create a Plan B if retirement happens unexpectedly due to job loss, health issues, or other intervening circumstances. Only 25 percent of Baby Boomer workers have a backup plan for retirement income if forced into retirement sooner than expected.

Perspectives on Retirement An overview

The following is partially based on a report called Perspectives on Retirement the 15th Annual Transamerica Retirement Survey, published in 2016.

In Canada and the United States, our retirement system has been referred to as a three-legged stool. In the United States:  the three legs are, Social Security, employer-sponsored retirement plans, and personal savings and in Canada, the three legs consist of, Old Age Security Income, Canada Pension, Registered Retirement Savings Programs. Over the last few years, critics have attacked the concepts of Old Age Security Income in Canada as well as the Canada Pension Plan.

In the United States critics have questioned if the Social Security fund is sustainable. The attacks by the critics have led seventy-seven percent of workers to be concerned that Social Security will not be there for them when they are ready to retire. In both countries, there has been a gradual disappearance of traditional pension plans provided by employers. As a result, many of us are not sure if the stool will be standing when we retire at worst, at best many of us consider that the stool has become wobbly.

Sixty-one percent of workers have not fully recovered from the recession of 2008-2009. This includes 41 percent who have somewhat recovered, 13 percent who have not yet begun to recover, and seven percent who may never recover. Because many of us never did recover there is a mistrust of government and a widespread lack of confidence in the idea that the government will help us in our retirement

Canadian and American workers are taking matters into our own hands and we are adding a fourth leg to the stool, continued work part time or full time, when we move into retirement. Sixty-five percent of workers believe that they could work until age 65 and not save enough to meet their needs. Only 51 percent of workers agree that they are building a large enough retirement nest egg.

The 17th Annual Transamerica Retirement Survey of Workers released by the non-profit Transamerica Center for Retirement Studies® finds that 40% of Baby Boomers are expecting a decrease in their standard of living when they retire, 83% of Generation X workers believe that their generation will have a harder time achieving financial security than their parents’ generation, and just 18% of Millennials are very confident about their future retirement. Approximately half of the workers across all three generations plan to work at least part-time during their retirement.

Reading to your grandchildren part 3

The following list is from the Australian Booksellers’ Association list of 50 Favourite Kids’ Books, voted on by 5000 participants from a database of all children’s books in English and published here

1. Possum Magic — Mem Fox and Julie Vivas

Mem Fox’s best-selling first picture book about Grandma Poss, who uses her best bush magic to make baby Hush invisible.

2. Harry Potter and the Philosopher’s Stone — J.K. Rowling

The first book in Rowling’s series sees the young Harry journey to Hogwarts School of Witchcraft and Wizardry, where he hones his magical powers and confronts Lord Voldemort.

3. The Very Hungry Caterpillar — Eric Carle

First published in 1969, Carle’s collage-style illustrations follow a caterpillar as it eats its way through a variety of foods to emerge, at the end of the book, as a butterfly.

4. The Fault in Our Stars — John Green

Young adult novel that tells the story of a 16-year-old cancer patient, Hazel, who attends a support group where she meets and falls in love with a former basketballer and amputee.

5. Where is the Green Sheep? — Mem Fox and Judy Horacek

There are blue sheep, red sheep, a bath sheep and a bed sheep. But where is the green sheep.?

6. The 39-Storey Treehouse — Andy Griffiths

In Griffiths’ and illustrator Terry Denton’s tree house there’s a chocolate waterfall, a non-erupting active volcano, a baby dinosaur petting zoo and the Believe It Or Else museum.

7. The Magic Faraway Tree — Enid Blyton

In the Enchanted Wood fairy folk live on every branch of the Magic Faraway Tree, home to the Land of Spells, of Topsy-Turvy and Do-As-You-Please.

8. Where the Wild Things Are — Maurice Sendak

Max, sent to his room in his wolf suit, rages at the injustice. When his room transforms into a jungle, Max sails to an island where he fights the Wild Things.

9. Diary of a Wombat — Jackie French and Bruce Whatley

Traces the busy life of Mothball, a “wombat with attitude” who wrestles unknown creatures, runs her own digging business and even trains her humans.

10. The Gruffalo — Julia Donaldson and Axel Scheffler

A mouse wards off predators intent on eating him by conjuring a fictional creature, half grizzly bear, half buffalo.

11. Matilda — Roald Dahl

The story of young girl gifted with magical powers but saddled with dimwitted parents.

12. The Book Thief — Markus Zusak

Nazi Germany, 1939: Liesel learns to read and shares the books she steals with the Jewish man hidden in their basement.

13. Tomorrow When The War Began — John Marsden

A group of teenage friends returns from a week-long camping trip to the bush to discover that all the people are missing and pets and livestock are dead or dying.

14. Anne Of Green Gables — L.M. Montgomery

Published in 1908 and set in Canada, tells the story of an orphan girl sent to live in a farming community in King Edward Island.

15. Charlie And The Chocolate Factory — Roald Dahl

Charlie Bucket realises his dream of entering the famous chocolate factory of Willy Wonka.

Here are five more books as a Bonus

16. The Hobbit — J.R.R. Tolkien

Follows the quest of hobbit Bilbo Baggins to win a share of the treasure guarded by the dragon Smaug.

17. The Secret Garden Frances — Hodgson Burnett

A spoilt, sickly child, Mary Lennox, becomes fascinated by a locked garden.

18. Wonder — R.J. Palacio

Born with a terrible facial deformity, 10-year-old Auggie longs to be normal. Now, for the first time, he is being sent to a “normal” school.

19. Harry Potter And The Deathly Hallows — J.K. Rowling

In the seventh and final novel in the series, Harry has turned 17, Dumbledore is dead and Lord Voldemort’s powers are increasing.

20. Are We There Yet? — Alison Lester

Much loved picture book by veteran Australian author and illustrator traces the around-Australia journey of eight year old Grace and her family.