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Trying to Encourage Millennials to Save for Retirement? Three Key Factors to Consider

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MILLENNIALS
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Despite assumptions that millennials are careless with their money, this generation (ages 18-34) is saving for retirement at an earlier age than their parent's generation. The problem is, many just don't know what to do with it as it's accumulating. Here are my top three things to consider if you're trying to encourage millennials to save for retirement:

Aware. They get it. They are aware of their situation. Millennials will hold several jobs during their lifetime, and when it comes to preparing for retirement, they will need to do most of the heavy lifting themselves. More likely than not, they won't participate in a traditional pension plan and aren't confident that Social Security will be there for them in the way it was for their parents and grandparents. Instead, defined contribution plans (e.g. 401(k)s) and IRAs will likely be at the core of their retirement safety net. If you are trying to help them, focus less on the why and more on the how. Share tips and advice that helps them figure out what they need to do -- like determining what to invest in, how much to invest and when -- in order to reach their retirement goals.

Digitized. Advances in technology have contributed to millennials' impatience when they can't get to answers quickly. Most need visual stimulation and connectivity. If information can't be reached by a smartphone, tablet or laptop, it might as well be buried under the ocean. These changes have allowed this generation to learn very efficiently, often bouncing from source to source and testing beliefs, theories and claims before they come to their own conclusions. Any financial advice they receive will be tested backwards and forwards to find the digital consensus. Millennials don't want a 32-page workbook or two-hour educational seminar. Give them information that is clickable, mobile and easy to research and test on their own.

Leveraged. Millennials have been driving on the "Easy Money Highway" for many years. Even after the 2008 financial crisis, consumer credit is abundant and cheap. Despite low interest rates, millennials continue to take on high levels of debt in form of adjustable rate student loans, mortgages and credit cards. They have yet to experience the impact of high interest rates or high levels of inflation. As a result, it is fair to assume their plans, beliefs, outlooks, risk tolerances and debt levels are influenced by these facts. Many millennials see student loans and other debt as a primary obstacle to saving anything for retirement. For some, the best course of action may be to aggressively focus on debt reduction first. But many will need to do both: save for retirement and pay down debt.

Although the trend is in its infancy, there are many hopeful signs emerging among millennials in terms of budgeting, saving and preparing for the unexpected. Let's keep this trend moving in the right direction and continue providing advice and education around planning for the success of their financial future.

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