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If you’ve read anything in the news about what a Millennial retirement will look like, you’ve noticed a widening preparation gap between Millennials and their predecessors at a similar age.  Why is this?

Stated simply, most Millennials don’t get excited by the prospect of delaying gratification and saving consistently to reach some eventual goal 40+ years in the future.  Blame long-term unpredictability and social media.

Instead, we want a more fulfilling life, bursting with experiences.  We want financial independence without having to follow this traditional retirement path.  Truthfully, we just don’t know what tomorrow will hold.

As a result, we’re more inclined to delay gratification a bit less than our predecessors and indulge more.  YOLO (you only live once), right?

And while this might be true of our generation, there are some other frictions Millennials have with preparing for a traditional retirement.

Namely, the amount of student loan debt we took on and the low wages most of us have come to accept.  Not all of us qualify for the Public Service Loan Forgiveness program.  Then again, not many do at all.

Another difficulty we face is career advancement.  Baby Boomers are living longer and therefore choosing to work longer if they have the opportunity.  This keeps their minds engaged while also providing more financial resources for their needs.  Certainly a win for those who can continue working.

However, this effect can have implications for the career opportunities of those waiting in line behind them.  If Boomers are able, many are ‘semi-retiring’ and remaining attached to the labor force.  And why shouldn’t they?  If they are in need and have the skills necessary to perform the required tasks, they shouldn’t retire.

While not always the case, many companies should welcome keeping their experienced workers longer.  Doing so would prevent facing a knowledge and skills gap from these departing workers.

Stated differently, phasing into retirement adds flexibility in the workplace.  It allows companies to continue meeting their customers’ needs while transferring knowledge from departing workers to their successors.  However, this is a double-edged sword.

For those seeking employment, these positions are likely being filled for longer by someone who can’t afford to retire at this time.  This delays bequeathing their roles to those next-in-line.

This forces the Millennials and Gen-Xers below them in the corporate pecking order to wait longer for promotions and pay raises until Boomers finally walk out the door.  Millennials and Boomers need those higher wages sooner rather than later if we want to learn how to build wealth through compounding returns.

We also have a tenuous relationship with work because we can’t seem to find it as easily as our predecessors.  Instead, we’re forced to learn new skills, build our person as a brand and take up side hustles to make up for the difference to have any hope of getting ahead.  We’re learning firsthand the differences between 1099 vs. W-2 work.

This is where I see the opportunity for Millennials to redefine what normal retirement will look like for us.  I don’t foresee us sailing off into a sunset to leave everything behind like so many Boomers hope to do.

I see us using unique skills and experiences to side-step solely pursuing traditional corporate advancement. I see us forging our own way.  I see us pursuing financial independence as a means for reaching the Millennial retirement we deserve.

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Financial Independence and Millennial Retirement: Redefining the Concept

For the reasons laid out above, the retirement definition will need to shift for Millennials.  That’s partly because when you look at the amount of Millennial retirement savings, the results aren’t great.

But it’s also because we can’t expect the same financial support programs that have helped others.  We don’t have the guarantee of a social safety net there to catch us if we fall behind. Sam at Financial Samurai views Social Security like buying a lottery ticket.  I am not quite as pessimistic, but I tend to agree with the notion of feeling lucky to get meaningful benefits from the program. Unsure of how the future will unfold, I find myself holding an unconscious bias for wanting to forge my own way built upon self-reliance, despite not necessarily knowing how.

The truth is, we don’t know what may come to pass- but it likely isn’t the status quo, because our country can’t afford it.  Because of these trends, our retirement plans must change.

With difficulty seeing what’s in our immediate future, let alone 40+ years down the road, we face hard money decisions our forebearers simply didn’t.

For most of us, we’re caught in a conundrum of deciding if we should invest or pay off student loans.  And homeownership?  Once we escape the realm of choosing between a condo vs. apartment, maybe someday.

How many Baby Boomers had to navigate the best student loan refinancing offers or the Federal student loan system writ large?  My guess would be a lot fewer than us.

Baby Boomers went to school in droves at affordable prices.  They managed to make respectable livings by advancing their careers, earning pay raises, and saving money along the way.

And those who didn’t?  About 25% of Baby Boomers cite having a pension available to them.  Many will also receive Social Security and maybe have a bit tucked away in their 401k and individual retirement account (IRA) plans.

This isn’t to say all Boomers will live comfortable retirements.  There are many who still need to work to make ends meet because they don’t have enough saved for retirement.

In the Millennial vs. Baby Boomer retirement debate, the point I am trying to stress is we are being forced to rely more on our own preparation for our own retirement than our predecessors.

We are a generation forced to make its own way in the world- more so than Baby Boomers or Gen-Xers.  It is up to us to seize this challenge and capitalize.

While our story is still being written, it’s clear- because we’re waiting to start saving, we won’t have an easy time.  Compound this further because Millennials have a fear of stocks last seen in those who grew up during the Great Depression.

If we can’t change the hand we’ve been dealt but want a different expected outcome, we need to do something different.  Something unconventional.  We need a new vision for what retirement can be for our generation.


Financial Independence Means Living Life on Your Own Terms

When I think about retirement, I don’t target some specific age when I know I’ll leave the workforce.  Despite setting aside the maximum in my retirement accounts and knowing how to save money for other priorities, I don’t know if I’ll have a ‘magic day’ where I permanently part with my coworkers and head for the back nine.

And if I’m being honest, that sounds boring.  I don’t find driving a golf cart into the rough looking for an errant ball as the ultimate reward for my life’s work.

Instead, I’d prefer to reduce my stress now by pursuing more projects or work I find rewarding.  Assuming adequate preparation for retirement, I have no intention of punching the clock one last time, strapping on my gold watch, and disengaging for my remaining golden years.

Therefore, I propose Millennials redefine the retirement definition to one which means pursuing financial independence and entrepreneurial activities.  That’s the mission of my site and how I plan to live my life.

If we redefine retirement to mean reaching financial independence, we can challenge conventional wisdom.  We can redefine how to earn, spend, save and invest not only our money, but our time.  Doing so would establish a solid financial foundation from which to live our best lives.

Along the way, Millennials will need to learn as much as they can about finances and question the accepted wisdom about money, work, and retirement.  For our generation’s new retirement definition, most current advice is incorrect, incomplete, or out-of-date.

Instead, we should create strategies for reaching financial independence.

4 Strategies to Make Sure You Reach Financial Independence as a Millennial

  • Control Our Spending and Learn How to Budget

The easiest dollar earned is the dollar not spent.  Controlling our spending with practical money management skills and financial literacy are the items within our control and are the biggest levers we can pull to increase our saving rate.  We need to learn how to optimize our tax returns by claiming self-employment tax deductions, mastering our understanding of MACRS depreciation, Section 179 deductions and Section 1231, 1245 and 1250 property for our small businesses. And if you have that FOMO bug and want to see those exotic places, I suggest checking if travel hacking through credit card churning makes sense for your financial situation.

  • Learn How to Start Investing Money

Conventional wisdom says to reach a safe retirement by the age of 67 (current age for full Social Security benefits), you should save 15% of your income for 40+ years.  That’s not a bad choice.  15% could get you to those endless rounds of golf.  However, there’s no guarantee Social Security will exist in its current form when we reach our 60s.  If you want to live the life you want, I’d suggest tripling that savings rate.  Perhaps consider start investing money in target date funds or other passive index funds, and realizing financial independence won’t happen overnight.  However, it is imperative to learn how to live within your means and develop side hustles because this will go a long way.

  • Have Side Hustles Create Variable Income

We should develop unique, in-demand skill sets and find side hustles which create variable income. Building these side hustles can reduce our dependency on a permanent job and give us freedom to pursue what we want most in life.  Another way to ween off Form W-2 income is to create passive income streams.

  • Create Passive Income Streams

Passive income is the best type of income because you can earn it while you sleep.  Also, specific types receive the same preferential tax treatment as long-term capital gains.  The general definition of passive income contains many forms: real estate, dividends, alternative assets, bonds, etc.  While some passive income has different tax rates, understand not all receive the preferential tax treatment.  However, creating as many various ways to make money without having to play an ongoing, active role in earning it is paramount for financial independence.

To reach financial independence, we should have investments and income streams which produce enough income to cover our cost-of-living and leave room for rises in the cost of living.

If we’re lucky down the road, we can throw in slimmed down Social Security and Medicare benefits for good measure.  Learning to create a budget in Excel, invest in index funds, develop profitable side hustles, and build passive income streams which work for your benefit is the surest path to a secure Millennial retirement.

Related: Margin Call: Why Buying on Credit Leaves Little “Margin” for Error

Financial Independence Means Having No Regrets

I wonder how many current retirees look back in regret about having worked a job they didn’t like for so many years and wished they’d done things differently?  My bet would be a lot.

Life doesn’t often give you mulligans, so I don’t intend to postpone my satisfaction in the hopes of one day reaching a traditional retirement.  I want to pursue financial independence and have the financial freedom to do what I want.

If Millennials are smart, we’ll learn to hustle and save.  This is what many of us will have to do to enjoy a Millennial retirement.  This is also the way to get what we want most of all: living life on our own terms.


Readers: What do you see as a Millennial Retirement? How are you planning to reach it? Please leave your thoughts and comments below as well as please consider subscribing to this blog.

About the Author and Blog

In 2018, I was winding down a stint in investor relations and found myself newly equipped with a CPA, added insight on how investors behave in markets, and a load of free time.  My job routinely required extended work hours, complex assignments, and tight deadlines.  Seeking to maintain my momentum, I wanted to chase something ambitious.

I chose to start this financial independence blog as my next step, recognizing both the challenge and opportunity.  I launched the site with encouragement from my wife as a means to lay out our financial independence journey to reach financial independence and connect with and help others who share the same goal.


I have not been compensated by any of the companies listed in this post at the time of this writing.  Any recommendations made by me are my own.  Should you choose to act on them, please see my the disclaimer on my About Young and the Invested page.

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Join the discussion 8 Comments

  • Nice post, Riley.

    However, as a Boomer, I’ll have to correct you on some of your assumptions. We don’t have pensions and aren’t planning to fade off into the sunset. We realize we need to keep our minds engaged. None of my retired clients are living as you describe. Only 7% or so of private companies still have pensions. Those who started in companies with pensions had them frozen when they discontinued them. Unless you work for the federal, state or local government, you likely don’t have a pension. Like Millennials, most of us are left to save and invest for our own retirement.

    There is a sense of entitlement in your descriptions of Boomers not retiring and preventing Millennials from getting promotions. I don’t buy that for one second. Quite the contrary. Boomers are getting forced into early retirement by many companies to make way for younger workers they can promote or hire for less money.

    Be careful making assumptions about any group as if they apply to all in that group. Are there some Boomers living as you describe. Absolutely. Just like there are Millennials who sit in their parents’ basements watching Netflix binging on nachos (OK, a little extreme :-)). We in the PF blogging community (myself included) are guilty of this much of the time. It’s something we should all work to improve IMO.

    • Young and the Invested says:

      Fred, thanks for your thoughtful response. I’ve edited parts of the post to reflect this dynamic.

      The numbers I’ve seen show roughly 25% of Boomers can expect to receive income from an employer-provided pension when they retire. While this certainly isn’t the majority, it is 4 times greater than the 7% you cite currently being offered to employees. But point taken: not many Boomers (nor Millennials) will receive a pension in retirement.

      One final point regarding Boomers- while they must prepare for their own retirement, they currently face a better social safety net than we can expect. Will the programs be altered for Boomers? Possibly. But if there’s a risk for Boomers, there’s a certainty for Millennials because the government can’t afford to finance these entitlement programs at this clip.

      I don’t intend for this to come across as an entitled Millennial piece. What I wish to convey above all else is we are a generation forced to make its own way in the world- more so than Boomers or Gen-Xers. And it is up to us to seize this challenge and capitalize. Hence the shifting definition toward financial independence.

      We face dwindled access to pensions, are overburdened with student loans, likely won’t have Social Security or Medicare benefits on parity with current recipients, and face higher barriers to entry for receiving a steady job with desirable benefits. Is this the case for everyone in our generation? Surely not. But on the whole, our generation faces these challenges more so than our predecessors.

      I’ll end my response with this: I am one of those lucky 7% of employees with a pension. But much like Social Security and Medicare, I don’t count on that pension to provide meaningful income to me in retirement. Why? Because I understand companies view it as a major liability to maintain and may one day alter or cut the program. In fact, my company already curtailed access to new employees within months of me joining. To the best of my ability, I don’t intend to rely on anything external to my own resources to prepare for retirement. And if we get Social Security in the end, down in Louisiana, we call that lagniappe.

  • I checked on the number of companies offering pensions after your response. I’ve seen numbers all over the place. I saw an article republished on Yahoo finance from Bankrate.com. They say 16% of companies have pensions. The 25% number may be a bit deceiving ( I don’t mean you’re deceiving 😀). As they say, the devil is in the details.

    Some companies have frozen their pensions and stopped funding them. Participants still have a pension, but it’s much less than what they were promised. Does that count in the 16% or 25% number? Who knows. This survey didn’t really say. I’m guessing many who hold frozen pensions are included in those numbers. I’m not convinced it’s that high or that they are full pensions. Still, they have something.

    You make a good point about jobs being harder to come by these days. Many Boomers had manufacturing-related jobs starting out. In the tech and gig economy, skills needed are much greater. Jobs have been shipped overseas. It’s definitely tougher to find good paying jobs.

    Many in your generation are saving large amounts of money, investing wisely, diversifying, and planning much better than some of us did. That’s a good thing for sure. The vast majority of all ages are not good at personal finance. That’s a universal problem.

  • Xrayvsn says:

    Excellent advice and take on retirement for the upcoming generations who certainly will have economic situations different from older ones.

    I do think the trend that millennials are setting is a good one for the population overall. Millennials as a whole stress work life balance and seek to enjoy experiences now instead of the delayed gratification type plans of the older generations

  • I do think the lack of delayed gratification is problematic for millennials. Not wanting to wait until retirement to really live is one thing, but not living within your means is a huge issue. Things are partially more expensive today because of debt. Easier access to credit and longer loan durations makes monthly payments more reasonable but total debt much higher. Promoting financial literacy and encouraging people to live within their means is not only important to the individual but to society overall.

    • Young and the Invested says:

      Couldn’t agree more. Living within your means has become rather difficult in some ways given the easy access to debt. However, with self-control and a realistic view on how best to finance life’s major goals, I think we as a generation can make it. Perhaps I’m just a glass half full kind of guy and I’m being overly naive. I hope not- I want my generation to have access to a secure retirement. But as I argue in the post: that definition needs to change.

  • Johnny says:

    I take issue with your comment that the country cannot afford the existing retirement safety nets. If little countries like New Zealand can see their way forward to provide these benefits I’m pretty sure the USA can.

    • Young and the Invested says:

      I take issue with it as well. The U.S. government should make sure it can finance these social safety nets for the American people. However, current funding and spending projections show both major entitlement programs becoming insolvent before Millennials have a chance to enjoy them.

      Afford means in a literal sense- we don’t have the money as the programs are currently designed and funded. Path dependent changes will occur along the way to postpone these insolvency dates until a major change will need to occur. This is why I imagine a lessened form of benefits will be available to Millennials.

      In the pay-as-you-go style system we have, it necessarily requires a growing population to fund the current beneficiaries. Our population isn’t growing quickly enough to sustain this current structure.

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