Jace FerraezAccording to new research published in a recent Politico article, Millennials are facing an uphill battle when it comes to retirement savings and building wealth. Alicia Munnell, Treasury Department veteran and member of the Council of Economic Advisers and the Federal Reserve Bank of Boston, suggested that as long as Millennials are willing to work longer than previous generations, retirement problems we may face aren’t “insurmountable”. How much longer? Try at least until age 70.

After reviewing some of the research, the main takeaway is rather simple: Even though Millennials have college degrees at a higher level than Gen-Xers or late baby boomers, they are behind in most other economic categories. As I have written before, Millennials entered the market place for employment at a really bad time (end of the dot.com bubble, great recession, etc.). Still, Munnell points to three problems that explain why Millennials are saving less and falling behind building wealth when compared with earlier generations. Let’s break them down quickly.

Lower Incomes/Limited Access to Employer Retirement Plans

Millennials are having difficulty finding jobs that are “career track” and pay well, so their earnings are already behind that of other generations. We all know the statistics about relatively stagnant wage growth compared with the cost of living—not good. Further, many millennials do not receive employer-sponsored benefits like retirement plans or health insurance.

No Home Purchase

The article rightly points out that home equity is often a significant retirement asset. While I believe that homeownership is not the be all end all way to accumulate wealth, studies have shown that when compared to leasing, home owners generally come out better in the end.

Student Loan Debt

No use in beating a dead horse with this category. Student loan debt is a major burden to most Millennials. Folks with these types of loan obligations generally have less to contribute to retirement.

While these problems paint a less than hopeful picture for the 25 to 35 age group, the good news is we still have a long time to work, i.e., retirement is far away. Munnell ends the article by also pointing out that waiting until you’re 70 to retire is a powerful tool with regards to the amount of social security benefits you may receive.  I won’t go into that because social security will likely not be around by the time we Millennials retire. The most recent projections show the program will be insolvent by 2034.

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