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How Millennials Are Changing The Retirement Conversation

It’s time to give credit where credit is due: millennials understand retirement in a way that no other generation has.

Retirement isn’t what it used to be.

In previous generations, people punched the clock at one company for however many years, looking forward to the gold watch and pension that they’d receive upon retirement.

With a few exceptions, pensions have joined the ranks of the dinosaurs: extinct. Now, the way of planning for retirement has to be altered to match the changing financial landscape. Millennials have proven to be able to adapt to these changes better than anyone may have expected.

Stop, drop, and roll with the punches.

There is a movement that’s sweeping the personal finance world called FIRE, or Financial Independence Retire Early. By taking their finances into their own hands at an early age, the FIRE movement has the millennial generation aiming to retire as young as 30 or 40.

You got that right.

While some like to focus on millennials’ fascination with avocado toast and think of it as their financial downfall, there are so many things that this young generation is doing right that makes me confident in their fiscal future—even more so than generations before them.

The younger generation is actually cutting spending and making far less frivolous purchases than their predecessors. They are more savvy consumers and are less provoked into spending money on material goods.

In addition, they are erasing the stigma of living with their parents. Formerly seen as a failure to launch, staying in their parents’ home after graduation is now widely viewed as a smart financial decision, especially for those millennials with student loans.

By spending less and avoiding large mortgages—among other factors—to FIRE becomes a realistic goal.

Understanding free agency.

One of the most notable changes that millennials are making in the corporate world is this idea of free agency. While previous generations often worked for one company for their entire careers, millennials are much more prone to changing jobs and chasing higher pay, better benefits and greater flexibility.

Because pensions are a thing of the past, millennials have found a way to put themselves in the driver’s seat of their career, taking the control away from their “boss.”

Delaying putting down roots.

Buying the big house with the white picket fence used to be the American dream and a measurement of success. Because of their more nomadic lifestyle and affinity for changing jobs, millennials are delaying purchasing houses, opting instead to rent for longer.

I whole-heartedly support this decision. Buying a house comes with so many added costs (maintenance, decorating, taxes…), that renting can be a much cheaper option.

Buying a personal residence should not be considered an investment, and even though renting may seem like putting money in someone else’s pocket, it’s actually buying the freedom that many millennials are seeking.

Taking sabbaticals.

Millennials are doing something previous generations never would have considered: structuring their lives to include breaks—perhaps even mini retirements.

It’s not uncommon now for someone to quit their job and spend six months or a year just traveling. When they return, they simply find another job. Millennials have perfected the art of the side hustle and no longer hitch their wagons to an employer, so they’ve given themselves a permission slip to take time off and balance their working lives with their personal lives. 

The lesson:

It’s time to stop the slander of the millennial generation and realize that just because they’re doing things differently than previous generations, it does not mean they’re doing anything wrong. Millennials have actually changed the financial world to meet their needs, rather than the other way around.

Because times are changing so rapidly, breaking away from the status quo of their parents and grandparents is a huge accomplishment, and something we should commend our kids for doing. They are embracing their goals, going after their dreams and ensuring that they live their lives according to their own standards. Graduating into retirement is no longer only a long-term goal but also can be a short-term one, and that is a very impressive feat.  

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