Millennials Would Rather Travel Than Save For Retirement
In a recent poll created by American Express Travel, surveyors revealed that they would rather focus on creating a “meaningful life” than spend time heavily investing in finances or careers.
Forbes reports that millennials express the same sentiments when they have to choose between traveling and saving for their retirement. And while dropping everything and moving abroad sounds amazing now, Forbes notes that if and when millennials choose to delay saving for retirement, they’ll likely be sacrificing the opportunity to have a comfortable lifestyle when they become senior citizens.
President and CEO of The American College of Financial Services, Robert R. Johnson, told Forbes time is the greatest ally millennials have when saving for a retirement fund, which should last more than 30 years. “Catching up is simply very difficult, as you can’t make up for lost time. If a 25-year-old invests $157 per month for 40 years and earns 10% interest, she will have accumulated $1 million at age 65,” Johnson shared. “If that same person waits until age 35 to begin saving, the monthly investment required to accumulate $1 million by age 65 is $439 per month. If that same person waits to start saving at age 45, she will have to invest $1,306 per month to accumulate that $1 million.”
The longer millennials wait to save their money, the more they compromise their chance to even retire at all. However, Zachary Abrams, an advisor for Capital Advisors, said that if millennials have to choose between traveling or saving for their retirement funds, they should pick the option that they will make them the happiest. “Everything has a cost, and the cost of saving at the expense of travel is the experience you won’t ever have or get back,” Abrams claimed. Although a once-in-a-lifetime trip may not allow a millennial to save more money for her retirement plan, Abrams’ theory resonates with those who have unconventional values.
Although Abrams and Johnson’s have opposing views, Ben Offit, a partner at Clear Path Advisory believes millennials can save for both their #travelgoals and #retirementgoals, simultaneously. In his model, Offit shared that if traveling is a high priority for an individual, they should save 75 percent of their monthly earnings towards it and 25 percent should be deposited into a retirement fund. “Once their traveling ‘itch’ has been scratched, they change the allocation of 75% savings towards retirement and 25% towards short-term and traveling,” Offit explained.
Which concept would you personally choose?