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Reality Check - Why it sucks for Gen Z and Millennials to save for retirement

Updated: Feb 2, 2020

Experts say the earlier you start saving for retirement the more you will have, unfortunately many forgot about reality.

By Allan R Kirby Personal Finance Blog discussion:  Why it sucks for Millenials and Gen Z to plan for retirement.

Today Gen Z and Millennials do not have it easy

Experts do forget how tough it is when starting out, because no matter how much you try and explain the idea of saving early, Gen Z and Millennials will struggle. Why? Because the keys to success today include doing more volunteer work, (yes that means no money) plus all the costs of just trying to get into university (we all can’t buy our way in ). Once in university, the tuition costs to attend have skyrocketed, not to mention that the housing costs around some universities are ridiculous. As mentioned by CNBC: “ Students at public four-year institutions paid an average of $3,190 in tuition for the 1987-1988 school year, with prices adjusted to reflect 2017 dollars. Thirty years later that average has risen to $9,970 for the 2017-2018 school year. That’s a 213 % increase.” (1), In addition wage growth has stagnated meaning the buying power today is substantially less than in the 1980’s, in fact, “Over the entire 34-year period between 1979 and 2013, the hourly wages of middle-wage workers (median-wage workers who earned more than half the workforce but less than the other half) were stagnant, rising just 6 %—less than 0.2 % per year.” (2), I do not need to be an expert to realize these facts. For example, when I was young I saved up a years’ worth of tuition, guess what? I did it “In a summer! Making around minimum wage”.

“I did my own research and found it shocking on the costs of getting the same education as I have"

Checking today's tuition prices at one of my old schools, to my shock, I found that a similar program still exists but comparing my tuition to today’s costs, the price has increased over 300% since I attended. This does not include transportation, housing, books and any other fees that may have gone up more than wages. Simply put, Gen Z and Millennials will struggle more if they want to get an education and the skills necessary to succeed.

“Tuition has gone up significantly more than inflation, wages have stagnated for younger works and entrance into university is tougher than before"

There is no guarantee that saving for retirement will be successful

When I was younger I was given a good piece of advice. Save as much as you can for retirement and that is exactly what I tried to do. It was not easy, between university, rent, food and “Student Loans.” I really did not have much to put away. I did, however, open a retirement account when I was 19 years old, but the problem was I could only put a small amount away. My initial mistake was not realizing that having a retirement account was only half the battle, I needed to invest, which I eventually did by investing in mutual funds later on. The problem was that after a few years, I had not accumulated close to what the experts said I would because of the following:

  1. Fees killed what little returns I was getting.

  2. Returns where not what I expected.

  3. Sporadic savings, I simply did not have the money.

“Nothing worked the way I thought it would"

I really do get it, the more you save along with higher returns, the more you will have for retirement. For example, if you start investing at age 19 and contribute $2,000 to your account every year until you reach age 27. Then from 27 to 65, you contribute $0, you could end up with over $1 million dollars by 65 assuming a 10% annual rate of return. But this is a big assumption! Most Gen Z and Millennials starting out will struggle to even come up with a few hundred dollars and no two ETF’s are the same, so to assume 10% annualized return is nothing short of crazy. I would be more comfortable assuming a 6-8% annualized return.

“Picking stocks is similar to gambling, you can win or you can lose."

Trading Stock

Most people are not traders but you can luck out and buy a stock that turns out to be an Amazon or a Google. However, for every mega successful stock there are dozens more that end up in failure. Take it from me, who has been investing for years on my own, there is some element of luck. People who boast about being millionaire by picking the right stock in many cases are just lucky. They could have easily been involved in an Enron or a Nortel, both of which saw their stocks go to $0. You never know what can happen to a stock. Take the bank stocks during the great recession in the latter part of the first decade of the 2000’s. They were considered a rock solid investment, but it turned out not to be the case. Many people learned the hard way there is no guarantees with investments.

It sucks for Gen Z and Millennials

I have no quick answer for the younger generation. As I mentioned before, higher tuition costs, stagnate wages, and increased competition to get into university along with requirements to volunteer instead of working for money have all contributed to younger generations struggling to make ends meet and get ahead with their retirement. It’s not easy for many and although there are exceptions, most of the Gen Z and Millennial generations will find it a tough go in order to succeed at retirement. My only advice is to do your best; try and put as much money away as you can, invest wisely and build your wealth up over time. It will not be easy but even if you regularly contribute a little, you can start to build a nice nest egg.


1. Elkins, Kathleen, (2019). Self-made millionaire: A simple chart changed the way I think about money, bach-a-chart-changed-the-way-i-think-about-money.html

2. Mishel, Lawrence; Gould, Elise; & Bivens, Josh (2015) Wage Stagnation in Nine Charts, Report

This is a blog written by Allan Kirby, who writes and produces Personal Finance articles and videos.



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