It has often amazed me how a single article on the internet suddenly whips up a global storm. A few days back, there was a similar stir centering around an article that stated that Millennials spend more money on coffee than on retirement savings!
A week later, Forbes did its own analysis to find out whether this claim was at all real and came out with the statement that the claim was not entirely false. They went on to say that Millennials spending more on coffee than on retirement savings, was possible, however highly unlikely. The research data from Consumer Finances also brought out the fact that Millennials save 18% more in retirement savings than the Gen X when they were the same age.
The important question:
However, my question amidst all this melodrama is simply this – How much money should a Millennial save for a comfortable retired life?
I mean, the coffee debate is all fine, but maybe just over a coffee…in life the real question hopefully should be brought to a different and more crucial perspective. For instance, I would like to ponder on why this headline attracted so many people in the first place. So many people actually believing that millennials spend more on coffee probably goes on to show that everyone, not just millennials, probably are not saving enough for their retirement.
The crux of the crisis:
And that is the main financial crisis of our times I think – that we do not think about or decide on the single most important financial decision of our lives.
And hence, the most important question should be – What percentage of their salary should individuals keep aside for their retirement?
The way forward:
The most effective and assured way towards having a comfortable retired life is automating your savings and getting into the habit of paying yourself first from your salary before spending on anything else!
Unfortunately, the lifestyle that this generation has all become accustomed to, works against imbibing this financial habit. Firstly, look at your monthly spending now. Think about your retirement age and just take a calculated guess regarding how much money you would need per month then, taking into account your increased medical bills as well as increase in price of commodities.
Now think, where will this money come from? Now, you get it right? Yes, the time when you needed to start your retirement savings was probably 20 years back! The next best time is NOW! Like right now…from this month itself!
If this means you need to make a couple of lifestyle change, so be it! Eat a little less, go out couple of times less, buy a little less number of dresses this years…ohh and before I forget, most importantly…have fewer cups of coffee maybe?