According to a survey by TD Ameritrade, a brokerage company, every second American millennial born between 1981 and 1996 believes that one day he will become a millionaire. Every fifth thinks that he will become one by the age of 40.
But a study by the Brookings Institution refutes this youthful optimism.
According to statistics, the generation of modern 35-year-old people is poorer than people of the same age, in whatever year, from 1989 to 2007. The economic crisis of 2008–09 hit the millennials particularly hard. If we compare the well-being of people at the age from 20 to 35 in 2016, it was a quarter worse than the same age in 2007.
The generation of young people has certain advantages in the labor market compared to previous generations: at least, they are better educated. However, according to analysts, they have a higher degree of loans.
Besides, the millennials hold responsibility for their pensions, while many representatives of previous generations may rely to some extent on other sources that form pensions.
Today, more and more young employees are earning on occasional work. Besides, we are to face a more difficult economic situation with the growth rate of economy is lower than in the past.
The study by the Brookings Institution is far from the first to clang a bell on the retirement future of current working people. According to the Organization for Economic Cooperation and Development, an ever lower proportion of millennials around the world can be considered as middle class. Less and less people over 35+ have their own homes compared to previous generations at the same age of their lives.
However, many young people are optimistic. According to a TD Ameritrade survey, more than 70% of men (35+) say that at some point they will become millionaires. Around 40% of female respondents are confident in that.
The problem is that the millennials plan to start saving for retirement at an average age of 36, which is actually much later than financial experts recommend. The rule of financial planning says: the sooner you start saving money for retirement, no matter how small the amount, the better. The main point is in a compound percentage of savings, when interest is added to each interest of savings.
The main problem on the way to financial planning and formation of personal retirement capital is thinking. Many simply say: "I do not have extra money, I earn little so I cannot start saving."
This is the main mental trap from which many people cannot escape for years.
How to get out of it?
Even if you save 30 thousand tenge a month, you see how they accumulate and it makes you want to save even more. And as soon as you save the first million tenge, then, as they say “the appetite comes while eating”, saving will become a good habit, which in the future with the help of compound interest will be able to give you a decent capital in the future.