Millennials Are Saving for Retirement, But Is It Enough?

America Saves Week is a time for us to check in on the progress of our savings goals—or create new savings goals. Millennials may hear this message loud and clear when it comes to retirement savings: research shows that even through the competing demands of student loans and increasing rent prices, millennials are starting to save for retirement.

• An analysis of college-educated millennials ages 23–35 found that 69% have a retirement plan.
• Another report focused on millennials and retirement found that 68% of millennials ages 20–37 said they are saving for retirement.
• One study found that the average age of millennials investing in their first mutual fund is 23 years old compared to age 26 for Gen X-ers and 32 for Boomers. Since investments in mutual funds are increasingly done through employer-sponsored retirement plans, it is likely that the majority of millennials investing in mutual funds are doing so through their retirement accounts.

So not only are more millennials saving for retirement than commonly assumed, they are also starting to save at earlier ages than previous generations. This is all great news, right? Not exactly.

Focusing only on millennials’ retirement savings rate can paint a deceptively rosy picture of millennials’ long-term retirement prospects. For example, in 2014, student debt in the United States exceeded $1 trillion. Over half of millennial college graduates reported at least one student loan they were still paying for and nearly half also reported feeling worried about being able to pay off that debt. Millennials with competing financial demands are likely not contributing enough to their retirement account to sufficiently meet their future retirement needs. Indeed, 70 percent of millennials estimate they will spend less than $36,000 per year in retirement, a figure 30 percent below what those currently retired spend.

For young Latinos, saving enough for a secure retirement is an even greater hurdle; Hispanic millennials face a double retirement challenge as young workers and members of a group with historically low access to workplace-based retirement savings plans. Nationally, two-thirds of Latinos do not have access to employer-sponsored retirement plans. Yet, even though young Latinos face unique hurdles to saving for retirement, NCLR’s research on Latino millennials finds that they are, in fact, thinking about it. One Latina spoke to the difficulty of planning and saving with limited finds: “This conversation [about retirement] is giving me anxiety. Honestly, I don’t know. I am 34, so I hadn’t gotten that far. Now I’m worried.”

It’s clear that millennials understand the importance of saving for retirement, yet many are facing real challenges to saving the recommended amount, or even saving at all—especially those employed in low-wage sectors or in jobs where employer-sponsored plans are less common. For this reason, it is vital that employers also do their part.

Employers who offer retirement benefits should provide one-on-one benefits counseling and enrollment assistance to their millennial employees. Those employers that don’t provide retirement benefits should provide employees information for personal retirement savings plans like the free myRA retirement savings account from the U.S. Treasury Department.

Saving for retirement is on millennials’ minds, but we must ensure that they are equipped with the tools and the support to make their savings goals a reality.