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Millennials reshaping well-known path to retirement

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Staff writer |
Getting older   Millennials expects to retire when they hit a savings goal

Millennials’ perspective on their later years and how to get there hints at a possible redefining of retirement, according to the Merrill Edge Report.

Nearly half (41 percent) of the generation surveyed expects to retire when they hit a certain financial milestone or savings goal, whereas their older counterparts are focused on leaving the workforce when they hit a certain age or can no longer work due to health concerns.

The survey of more than 1,000 mass affluent Americans reveals that the largest generation in today’s workforce has a different view on retirement, alluding to a potential shift of the life milestone in the years to come. For millennials, retirement is more than a time for rest and relaxation – it’s a time full of possibilities.

The majority (53 percent) of millennials view retirement as the start of something exciting. In comparison to their elders, 21 percent of millennials are more likely to make pursuing a passion (10 percent), furthering their education (7 percent) or starting/growing their own business (4 percent) their priorities in retirement.

Also looking toward the future, 47 percent of millennials believe the outcome of the 2016 presidential election will have a positive impact on their long-term financial goals, higher than any other generation.

While millennials are taking a goal-oriented approach toward their retirement, they align with Americans overall in thinking they could be more proactive.

Nearly half (48 percent) of Americans say they are most insecure about some aspect of their finances (financial future, retirement savings or income), with retirement savings (21 percent) being one of their top insecurities, ahead of their personal relationships (10 percent), judgment of others (6 percent) and career path (4 percent).

Americans also cite that daily expenses in retirement will dominate their financial future (28 percent), more so than managing health care expenses (17 percent) and housing expenses (17 percent).

And, despite these strong sentiments, they still don’t seem to prioritize retirement savings. When asked how proactive they were about planning for retirement, nearly two in five (38 percent) award themselves a grade of “C” or lower and only 18 percent give themselves an “A.”

These savings shortfalls may be indicative of the retirement today’s retirees are living. When asked what they have done in retirement that they didn’t expect to, retirees’ top response was “spent more money than anticipated” (30 percent), followed by “moving to a new location” (19 percent) and “feeling a lack of purpose” (18 percent).

Top priorities of retirees also seem to differ from those of non-retirees.

The retirees’ top priorities include maintaining their standard of living (29 percent), followed by spending time with loved ones (27 percent) and maintaining their health (23 percent).

Despite that nearly one in five non-retirees hope to make traveling the world their top retirement priority, only 5 percent of retirees have prioritized traveling.

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