How much do millennials need to save for a comfortable retirement?

Everyone, including millennials, wants to know exactly how much money to save for a comfortable retirement, so they can set it and forget it. JPMorgan Chase (JPM) tried to figure this out for the generation born between 1982 and 2004.

His 2015 study “Millennials: Streaming Now: Millennials’ Journey from Saving to Retirement” tried to answer this question, considering how life, the market, and the government might affect retirement plans. The following is a summary of the numbers proposed by JP Morgan Chase and the three most common retirement problems that millennials may encounter.

Key points

  • Nearly half of millennials cannot use employer-sponsored retirement accounts.
  • If millennials do not invest in stocks, they will not be able to save what they need.​​
  • Due to the impact of automation and the Internet, millennials are facing job shortages.

What millennials need for a comfortable retirement

In this study, JPMorgan Chase found that if millennials start saving at the age of 25, they will need to save the following funds to retire at 67 and reach their retirement income goals:

  • People with a median income need to save 4% to 9% before taxes.
  • Those earning income in the affluent category need to save 9% to 14% of their pre-tax income.
  • Those who are considered high net worth need to save 14% to 18% before taxes.

Mark T. Hebner, founder and president of Index Fund Advisors Inc., Irvine, California, and Index funds: a 12-step recovery plan for active investors,explain:

“Due to higher taxes and the fact that they invest less of their total income each year in social security, wealthy and high-net-worth millennials will need to save more than middle-income earners. These combined effects mean they must spend more Relying on their own savings can fund the standard of living after retirement.”

In addition to the pre-tax savings listed above, the study shows that millennials need to save 2% of their after-tax income. If they have an employer-sponsored retirement plan, 50% of employers match up to 3% of their Salary-this information makes it more complicated to come up with a simple answer.

Many things may affect how much millennials can put away and their lives after retirement. The following three factors may require more savings than the above estimates.

Get a retirement plan

According to a 2019 survey by, more than 25% of millennials cannot get an employer-sponsored retirement plan, and another 30% of jobs do not meet the eligibility requirements to take advantage of one (they may, for example, be only part-time jobs). This means that less than 45% of people can enjoy these retirement plans. This will have a major impact on how much you can save in your tax-favored account. The less you invest in company retirement accounts (such as 401(k) plans), the more you save overall.

For example, with a 401(k), an individual can pay up to $19,500 in tax deferred benefits in 2021 (an increase of up to $20,500 by 2022). If they cannot get a 401(k) plan and need to use an individual retirement account (IRA), they can deposit up to $6,000 per year in the 2021 deferred tax account. This contribution limit will remain unchanged in 2022.

This means that more people will have to enter a taxable savings account, thereby reducing the compounding effect of the account, because you must pay taxes on any interest income or capital gains. In addition, you missed the employer match assumed in the calculation above, so you must also save the percentage yourself.

In addition to saving for retirement, millennials must also ensure that they have an emergency fund to tide over difficulties in the event of unemployment or unexpected crises.

Asset allocation

The correct allocation of stocks and bonds can have a significant impact on the returns of your investment portfolio over the years. If the allocation of shares is too low, you will not be able to achieve your goals.

Without more exposure to stocks, you simply cannot accumulate the funds needed for retirement. If your investment lacks the potential for appreciation, inflation alone will destroy your dollar purchasing power. Therefore, if there is too much pressure to add more stocks to your portfolio, you will have to find a way to dramatically increase your savings.

Job uncertainty

Although computers and networks make things very simple, they also have some disadvantages. In your lifetime, the chances of your work being replaced by automation increase.In addition, due to the popularity of the Internet, competition from foreign workers who can complete your work remotely is getting fiercer — and may be paid much less than you get, which reduces the need for full-time employees.

With these two factors, as companies seek to cut costs, the chances of unemployment will increase. When you are unemployed, you lose time and money to deposit in your retirement account and get employer matching. You also run the risk of needing to withdraw your retirement savings to sustain your livelihood. This is another reason you need an emergency fund.

Bottom line

Many reasons Why millennials emphasize saving for retirement. The best way to deal with all these problems is to save as much as possible. A good goal is to save at least 15% to 20% of your total income to ensure you live the life you want after you say goodbye to the workplace.


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