A $4 Million Retirement: That’s How Much Millennials Will Need To Live Comfortably

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If you're a millennial wondering how much money you need to comfortably retire, now might be a good time to practice some calming techniques. According to two recent studies, you probably need to save between $3 million and $4 million.
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An analysis conducted by Seeking Alpha found that younger millennials — those in their 30s — would likely need to save at least $3.6 million to enjoy a comfortable retirement. To be on the safe side, it might be wise to round that up to just $4 million. This assumes that you want to retire by the age of 62 at the latest and have not saved anything apart from emergency money.
Older millennials approaching 40 could have just $2.8 million in savings to retire comfortably, factoring in factors like inflation.
A separate analysis by Wealthcare Financial had a slightly lower bar, the Motley Fool reported. It turns out that Millennials and Gen Zers need up to $3 million in retirement savings to really enjoy their golden years. This number is on the high end of the target range and assumes you'll be spending about $150,000 per year over 20 years of retirement.
Those are staggering numbers when you consider that the average retirement savings in 2022 is about $168,000, according to a ConsumerAffairs survey of 1,000 Americans earlier this year. That's actually an improvement over data cited in a 2017 report by the Government Accountability Office, which found that the average retirement savings for Americans between the ages of 55 and 64 was just over $107,000.
There are a few reasons Millennials will need a lot more when they retire - and most have to do with rising living costs and uncertainty about Social Security. Under the current system, the Social Security Administration Trust Fund for Old Age, Survivors and Disability Insurance will default in 2035. When that happens, Social Security taxes paid by employers and employees are expected to only cover about 78% of subsequent benefits for years.
Based on these and other factors, the Wealthcare Financial Report recommends that Millennials and Gen Z strive for these financial goals:
$500,000 in retirement savings until age 25.
$1 million by age 40.
$2 million by age 50.
$3 million by age 60.
If you haven't saved that much, you're not alone. As reported by the Motley Fool, a Vanguard report found that adults between the ages of 25 and 34 had an average 401(k) balance of $14,100 as of 2021.
Saving and investing for retirement
The key is to start saving now. If you haven't already, set up a 401(k) account through your employer and try to contribute at least enough to meet the Employer Match. If you're self-employed or your employer doesn't offer a 401(k), consider setting up an IRA account. Seeking Alpha recommends setting up auto-debit or auto-transfer accounts that can be used for retirement planning.
But that's just part of a retirement savings strategy that could save you $4 million. The other part is investing your money in such a way that its growth rate exceeds inflation and earns interest over time.
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More: Retirement Savings: These 7 Life Events Can Lower Your Medicare Premiums
One strategy Seeking Alpha recommends is to invest a portion of your 401(k) in funds that can grow your wealth quickly, such as: Other investments should flow into less volatile, slower-growing assets that have a history of generating stable returns and can hedge against near-term losses.
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This article originally appeared on GOBankingRates.com: A $4M Retirement: That's How Much Millennials Need to Live Comfortably

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