Despite retirement posing less of a financial challenge for many millennials, potential drawbacks before they arrive there have them apprehensive. Factors like unpredictable markets, high-priced housing, and wavering trust in Social Security have led to a fear among younger Americans that a significant financial upset might entirely thwart their retirement plans.
Recent research by Allianz indicates that about 62% of Americans are anxious that an economic crisis could upset their retirement strategy. Millennials, in particular, express the greatest concern about not saving adequately for retirement.
Chris Diodato, Founder of WELLth Financial Planning, attributes this anxiety to millennials' early experiences with economic uncertainties such as the 2008 Great Recession. This early exposure to financial upheaval has resulted in an overall skepticism towards job security, investment markets, and retirement programs like Social Security.
Diodato suggests that incorporating these fears into financial planning can lead to more robust plans. Stress-testing worst-case scenarios and integrating them into plans during prosperous periods can practically prepare millennials for any looming economic crises. This preparation can prevent rash decision-making during challenging times.
Dioddato offers hope, insisting that it's never too late for millennials to progress financially. He advises starting small, taking advantage of time, and allowing small-as-may-seem savings to grow into substantial amounts later. A recommended strategy is to automate monthly contributions into a Roth individual retirement account and not to scrutinize market performance too often.
Diodato assures millennials that by consistently saving and revisiting their financial strategies, they'll be content with their results after a few years. He recognizes that their fear of economic failure stems from real experiences of recessions and changing social safety nets, but he maintains that resilience-focused financial plans can alleviate these worries.