The pandemic has brought about big changes for many Americans. Surprisingly, some of the financial shifts resulting from COVID-19 have actually been positive ones.
In fact, a recent AIG Survey called Moving Forward: Planning for the future in changing times showed that one generation is now much more optimistic about their retirement prospects than in the past. And you may be surprised to discover which demographic group has changed its outlook for the better.
These Americans are now much more positive about their retirement prospects
According to AIG's study, millennials are the Americans who have experienced the biggest positive shift in their view of retirement. A whopping 45% of millennial survey respondents said they now have a more positive outlook on their retirement prospects post-pandemic, compared with just 26% of Gen X members and 13% of baby boomers.
This may come as a surprise, as members of this generation have faced unprecedented financial challenges. These have included record-high student-loan debt, a Great Recession as they came of age and entered the job market, and slower economic growth during their time in the workforce than members of previous generations.
The optimism of millennials is not misplaced, though. AIG's data also reveals that 53% of millennials were able to increase their savings rate in recent years, with 48% seeing an increase in their savings and assets. Just over 4 in 10 millennials also saw their household employment income go up, while 39% saw a decline in the level of non-mortgage debt.
Members of every generation can improve their retirement prospects with a few simple steps
Although it's great news that so many millennials have seen their financial circumstances improve and are now exhibiting a more positive outlook on life in retirement, the reality is that everyone should be able to look forward to this time in their life. The key to being excited about retirement is to understand what you need to be financially prepared for and take proactive steps to ensure you have the funds. This involves:
- Setting detailed retirement-savings goals. Take the time to figure out the amount of money you'll need as a retiree. There are a few approaches to doing this, including assuming you'll need around 10 times your final salary. Then break down your big goal into small ones by calculating the necessary amount to save each month. Calculators on Investor.gov can help.
- Automating your savings efforts. The best way to ensure you accomplish your retirement goals is to set up automatic transfers so investing happens without any effort on your part. If you know you need to invest $500 per month, arrange to have the money taken from your paycheck to go into your 401(k) or have the funds transferred to your IRA or other tax-advantaged account on payday.
If you automate your savings efforts and consistently meet your investing goals, you should be able to look forward to retirement with the confidence that comes from knowing you'll have the necessary funds to support yourself after paychecks end. Whether you're a millennial or fall within a different demographic group, you deserve to look forward to a life free of financial worries in your later years, so it's worth the effort.