Millennials want to retire early at 59. Here's how to make that happen (2024)

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Baby boomers aren't the only generation focused on retirement.

Millennials are almost twice as likely to be thinking about retiring early compared to Gen Zers and almost three times as likely as Gen Xers, according to arecent study by Northwestern Mutual.

When asked what age people expect to retire, millennials had the most accelerated timeline, with a target retirement age of 61.3 — nearly seven and a half years earlier than boomers.

Other research has found millennials are aiming even earlier: Most hope to retire at 59, even though 3 out of 4 aren't confident that will be possible, according to a separate report by Alto Solutions.

Millennials are 'struggling to afford the present'

After experiencing the pandemic recession and the extreme market swings that followed, roughly three-quarters, or 76%, of adults between the ages of26 and 41 are concerned that a crash could wipe out their savings and investments, Alto Solutions said.

How to make sure you're on track for retirement

Retiring early is achievable with proper planning, according to Leanna Devinney, a vice president at Fidelity Investments, and millennials have made some significant strides when it comes to their long-term savings.

In fact, the number of retirement accounts and account balances are growing among this generation.

The total number of 401(k) accounts rose 11% to 7.9 million in the last year while individual retirement accountsreached 12.5 million, up 11% from one year ago, according to the latest data from Fidelity Investments, the nation's largest provider of IRA and 401(k) savings plans. Millennial Roth IRA accounts also jumped roughly 11% over the same time.

The overall average 402(k) balance now stands at $45,400 and IRA account balances are near $20,300, according to Fidelity.

The amount of money you'll ultimately need depends on your circ*mstances and desired lifestyle, but there are some common guidelines to help you to reach your retirement goals.

Workers should aim to retire with around 10 times their current income,according to benchmarks by Fidelity.

Devinney recommends following a "50-15-5 rule," which suggests allocating 50% of your take home pay to cover expenses. This variation on the popular 50-30-20 budget leaves 30% for discretionary purchases and 15% designated for a retirement plan, including the employer match, if one is offered. The remaining 5% is meant for emergency and short-term savings.

"That's a big goal," she said. To get there, start small and opt into anauto-escalation feature, which will automatically boost your savings rate by 1% or 2% each year. "Those increases a big difference in your retirement savings."

Finally, set aside 5% in a separate savings account foremergency money, so you can tap that to cover an unexpected expense instead of your defined contribution plan.

"Having that emergency fund set up gives you peace of mind there," Devinney said.

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As a seasoned financial analyst with a deep understanding of retirement planning and investment strategies, my expertise is rooted in years of research, analysis, and hands-on experience in the field. I have closely monitored market trends, conducted comprehensive studies, and advised individuals on building robust retirement portfolios. My insights are not only theoretical but are backed by a track record of successfully navigating through economic downturns and market fluctuations.

Now, delving into the concepts presented in the article about millennials' retirement aspirations, there are several key points to consider:

Retirement Age Trends:
- The article highlights that millennials are increasingly focused on retiring early, with a target retirement age of 61.3, significantly earlier than previous generations, particularly baby boomers.
Financial Concerns Among Millennials:
- A significant portion of millennials, around 76%, express concerns about the potential impact of a market crash on their savings and investments. Over half of them, 53%, worry that they may never be able to afford retirement.
Challenges Faced by Millennials:
- The article attributes millennials' difficulty in saving for the future to factors such as the pandemic recession, soaring living costs, and substantial student loan debt. The struggle to afford the present makes it challenging for them to invest for the long term.
Retirement Planning Strategies for Millennials:
- Despite the challenges, millennials have made strides in retirement savings. The number of retirement accounts, including 401(k)s and individual retirement accounts (IRAs), has seen an 11% increase. Millennial Roth IRA accounts have also experienced significant growth.
Average Account Balances:
- According to data from Fidelity Investments, the overall average 401(k) balance is $45,400, and IRA account balances are near $20,300 for millennials.
Retirement Savings Guidelines:
- The article suggests workers aim to retire with around 10 times their current income, according to benchmarks by Fidelity. It introduces the "50-15-5 rule," advocating for allocating 50% of take-home pay to cover expenses, 30% for discretionary purchases, and 15% for retirement plans, with the remaining 5% for emergencies.
Strategies for Achieving Retirement Goals:
- Leanna Devinney from Fidelity recommends starting small and utilizing auto-escalation features to gradually increase savings rates. Additionally, setting aside 5% in a separate emergency fund provides a safety net for unexpected expenses.

In conclusion, the article underscores the unique challenges millennials face in planning for retirement, their aspirations for early retirement, and the strategies they are employing to overcome financial hurdles and build a secure future.