Millennials and Gen Xers appear ‘particularly optimistic’ about certain milestones, according to a new Bankrate report.
Start saving up, millennials and Gen Xers.
The millennial generation (defined as ages 18 to 37) believes that 61 is the optimal age to retire, according to a recent Bankrate.com survey of how Americans view ideal ages for financial milestones. Generation X (ages 38 to 53) had an even more buoyant outlook, suggesting on average that the ideal retirement age is 60, per the report published Wednesday.
In fact, Americans on average consider the ideal retirement age to be 61, according to the survey of 1,001 people. Older Baby Boomers (64 to 72) pegged the ideal age at 64, however, while the even-older Silent Generation said it was 65. (A separate Gallup poll released in May, meanwhile, found non-retired Americans predicted they would retire at 66. The average U.S. retirement age is 63.)
“Millennials and Gen Xers seem to be particularly optimistic, in many cases, in terms of the age at which they would reach their financial goals — especially when it came to retirement,” Bankrate.com analyst Amanda Dixon told Moneyish. “It’s great to have a goal to want to retire early, but I think people need to think carefully about the steps they should take to make that happen.”
For instance, she said, “people need to start aggressively saving for retirement if their goal is to retire early.”
“That means start saving as soon as possible — it needs to be something that you do automatically and consistently,” Dixon added. “So if you don’t have a 401(k) through your job, you need to be setting up an IRA on the side and have automatic retirement contributions made with every paycheck.” (Nearly six in 10 Gen Xers surveyed said people should start socking money away for retirement by their 21st birthday.)
Also read: Retiring early could kill you
Dixon suggested that younger people may be “a little bit naive” in their retirement aspirations, “and what they’re saying could change as they get older.”
“Retirement is something that’s further away from them, so they have time on their side — whereas with the older folks, they’re either approaching retirement or they’re already there,” she said. “So that’s more of a reality for them, and they know how difficult it is to save enough money for retirement, especially with health-care costs rising and people living longer.”
Meanwhile, survey respondents on average thought the ideal age was 28 to buy a first home; 22 for a first credit card; 21 to lease or buy a first car; and 22 to start saving for retirement. Millennials set a relatively earlier target age for opening a first credit card: 63% of them thought people should have a credit card before age 21, versus 37% of the older generations. (Forty-seven percent of cardholders got their first one before age 21, according to a 2015 CreditCards.com report — and many of them opened their cards before the 2009 CARD Act, which made it more difficult for people under 21 to get a credit card on their own.) Fourteen percent of millennials believed people should buy or lease a car prior to their 18th birthday, compared to just 7% of older folks.
“I would say that some of (the ages for financial milestones) were realistic; others not so much,” Dixon said. “Getting a car at 21 … that could be realistic. And getting a first credit card at 22, I think that’s realistic — I think people might want to actually think about getting it at a younger age, if possible, or at least being an authorized user on your parents’ card so you can start building credit as early as possible.”
As for 28 being the ideal age for a first-time homebuyer, Dixon pointed out that the average first-time homebuyer is 32. “It’s possible, depending on your personal circumstances and where you live — so for some people, that might be realistic,” she said. “For a lot of people, buying a home in their 20s is not possible.”
The ages at which people hit these financial milestones vary from person to person, Dixon added, and it’s hard to nail down a hard and fast rule. “It depends on a lot of different factors: It depends on your own financial habits, it depends on where you live, it depends on the cost of living in the area where you live,” she said. “It’s not a problem to set a financial goal based on age, but make sure that it’s realistic based on where you are.”
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