Why You And Money Need To Have A Serious Talk
What do I know so well about money, that I have have the audacity to even tell others on what to do?
I'm no David Ramsey or Suze Orman (some real nerve I have... I know), but I am a 25 year old money coach and enthusiast who has been able to amass 35% returns in my investments every single year, for the past 3 years (while also writing this as we go through the biggest pandemic of our times - shout-out to COVID-19). I have also paid off a 5 year $13,000 car loan, 2 years earlier than I was supposed to (this year), and am on my way to increased financial wealth and stability with multiple streams of income, continuous monthly savings and value investments.
I can say this with no doubt, not because my ego is too big for my own head or weight to carry, but because I understand what it takes to save early so that I can retire early and with the utmost amount of comfort, when I do. I also want other millennials to know they can set themselves up on a path to do exactly the same too.
Let's Talk Retirement
I can tell you that the average millennial will need between $500,000 - $1,000,000 by the time they retire, to live comfortably. *Current research suggests, that about only 24% of millennials (defined between the ages of 24–41 as of the year 2020), have $100,000 or more in their savings.
So, let's say for example you are at the bottom of the age range described for a millennial - which is the age of 24. Let's also say that the age you are set to retire at is 65. If my math is correct, you have approximately 41 years to save at least a **minimum of $500,000, so that you can live a life most comfortable in your retired years.
Why is This Important?
There are baby boomers right now, who fear retiring at any given second because they do not have enough savings to last them throughout their retired years. Due to this, most retirees don't actually "retire", and instead spend the rest of their able lives checking out your groceries part-time at your local retailer. You know your grocery grandma, who you love checking out your groceries with every Saturday morning because you two just have the loveliest conversations about baking bread? Yeah, her.
And, honestly… there's nothing wrong with the conversation. I'm not here to judge on what you like to cook or bake, or spend your hard earned money on at the grocery store either. What I do have a problem with is a 70 year old women - who did not prepare and plan properly for her financial future - that even at the ripe old age of 70 still has to work a 9–5, just to make ends meet scanning out your groceries. While she could've been at her summer cottage (second home too) baking her famous homemade bread.
This is the story for many of us millennials who have immigrant parents, who are working well into their retirement years. Or, who will have to work well into their retirement, because they will not have enough savings to go without.
I look at my dad who is 67 (and is even worst off as he is "self-employed" and does not receive a pension) and continues to do his accounting business - not because he truly loves and enjoys doing it - because he needs the money and still has thousands of credit card debt and a mortgage to pay off. My mother has another 10 years before her retirement, and she will also have nothing saved, simply because my parents did not prepare nor plan for their financial future.
Instead, they will be spending the last years of their precious lives, in production mode (or relying on their kids) and not in rest.
The Aging Financial Burden
This leads me into the other dark side to this situation. Let's go back to the example of grocery grandma. Grocery grandma could be at an age now, where her health is extremely poor and/or deteriorating, so she decides to quit her part-time job and her family has to put her in a nursing home. However, when looking at elders who come from low to middle-income households, the burden is instead placed on - you may have already guessed it - you. Parents are increasingly having to live with their aged children, because they do not have the money themselves to put themselves in a nursing home or a long-term care facility.
Living with in-laws is a great alternative to those who may want to live with their parents until their dying day, and have the financial capability to take care of them (I would love to meet you, no shade). However, when it comes to parents who have significant health problems that require 24/7 assistance and emergency care, this can become an extreme burden on families, who have their own problems to attend to, extra responsibilities (kids) or are just tied up with their own careers and lack of steady finances.
This opinion piece is not trying to say that being old is automatically a burden, and a burden to your children. This doesn't always have to be the case. However, it is if you did not financially prepare yourself for your future or for generations to come. Being financially stable is so much more important, when you realize it's not just about you, but about the people around you and who will come up after you. I grew up with immigrant parents, who have a traditional belief that the sole reason you have kids is so that when you eventually grow old, they will turn around and take care of you.
It Starts With You
This is the 21st century, and this belief that we need to rely on others financially because that's just the way it is…needs to stop. This is what creates a world of codependents and a lack of emotionally independent decision makers.
We need to become a society of financial independents, who rely on nobody else but ourselves to make sure we are in a stable financial position. I am not saying that you have to be rich, and that that is the end goal to all our life problems. Rich does not = wealth. Being wealthy is about having enough money so that you are not living paycheck to paycheck and are able to live the life you truly want, because you made plans to always have money set aside for rainy days, retirement and then last the other set of money for play.
So, you have three choices to make with your money right now. You can either:
a) Slack off and worry about your finances when it's too late. This leads to having to continue working well into your retirement.
b) Fail to prepare for your own retirement, so that now you must live off of your children. Not because they want you to, but out of financial need.
c) Get serious about your money, and start to prepare and plan for a financially stable and secure future
What will you choose?
In the End...
The most important thing to do, is to save. Saving money is crucial to you living a more financially stable and abundant life. Not spending with no purpose and goal. You can go at whatever pace you please, this is not a race. What's important is that you are planning ahead.
This can be as simple as calculating out how much you will need to retire and work everyday towards that amount. There are so many tools and calculators out on the great world wide web, that you can plug in to see how much money you would need to save to have a million dollar retirement, how much money you will need to put a down payment on a home, how long it will take to pay off your debts and etc.
The possibilities are endless, and there is no one formula that fits all. Of course, there will always be particular situations which may need special consultation and if this is you, you should definitely reach out to a financial expert for advice.
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Check out the link to the U.S. based article on millennial savings here .
$500,000 is the minimum the average millennial will need to save for retirement, but this depends on your circumstances and where you are at in your financial journey. Please make sure you check for yourself what this number will need to be.
Sign-up to watch my free masterclass on "Saving While Living Your Best Life", to learn about all the savings hacks and tools that will instantly have you saving more money today without having to even budget. You can catch the masterclass replay here .
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