Businessolver Blog

It’s Not Too Late for Millennials to be Strong Savers

It’s Not Too Late for Millennials to be Strong Savers
Posted on Tuesday, June 26, 2018 by Kent Rausch

The wealth gap between generations continues to widen.

It's-not-too-late-for-Millennials-to-save-for-retirementWith strong markets during their formative years, many Baby Boomers were able to increase their wealth and actually save. Millennials, on the other hand, seem to be drowning; saddled with student loan debt, stagnant wages and lack of affordable housing, it’s no wonder 66 percent admit to having nothing saved for retirement. Those who are saving aren’t saving enough.

The Great Recession

One of the major money-saving hurdles for Millennials was entering the workforce during the Great Recession, which made it extremely difficult to find well-paying jobs. With lower-paying jobs, the Gen Y generation often turned to credit cards to make up the difference and were more likely renting instead of buying their homes. Unlike mortgages, credit card, car loans and student loans do not fund an appreciating asset which is why Millennials have been less able to amass or boost their wealth in the last few years.

Tech may be the key

However, it isn’t all doom and gloom, even if you’re a Millennial who needs to catch up. Millennials tend to be very tech savvy, and with the constant and consistent technological updates to banking and saving, this could be the golden ticket to your golden years.

So, how does Annual Enrollment present a retirement-saving opportunity?

One of the easiest ways to save money is by enrolling in a high-deductible health plan (HDHP) and immediately contributing into a Health Savings Account (HSA). Some of the many upsides to an HSA are:

  • You don’t pay taxes on your payroll deductions
  • You don’t pay taxes on the interest/investments earned
  • You don’t pay taxes when you take it out and use on healthcare expenses at retirement

That means you receive triple the tax savings while setting aside money for that unpredictable medical event. Plus, you are starting to save for retirement healthcare costs, which may be sizeable. According to HealthView Services, a 65-year-old healthy couple can expect to spend $266,600 over the course of their retirement on Medicare premiums alone. So, the sooner you start putting money away, the better.

A few ways to save

Knowing how much money you need to have in savings for a comfortable retirement in 35 years is difficult for anyone to predict. There is no crystal ball that can forecast how much to set aside for retirement or healthcare costs in the future, and saving isn’t always easy.

However, making a few simple life changes can enable you to set aside $50-$100 a month. That’s just a little less eating out, fewer of those expensive coffees, or cancelling one of your subscriptions. It may seem small but saving $100 per month can get you between $15,000 to $20,000 in savings over 10 years.  

Don’t feel overwhelmed; you still have time to save. By opening an HSA and contributing as much as you can (up to the annual limit), you are well on your way to saving money for your health and retirement costs.

New York Times Financial Editor David Enrich stated, “Money can’t make you happy, but it does allow you to be miserable in comfort.”  There is no better way to be comforted as you get older than knowing you have saved enough to cover your healthcare concerns, so if you’re not saving today, start tomorrow.