One of the questions facing the members of Gen Y is this: Will I be ready for retirement?
There are a number of challenges facing Gen Y  (roughly defined as those between 18 and 34 right now), and many of these challenges are making it difficult for members of Gen Y to plan for retirement. Many of them are struggling just to get by as it is, much less prepare for a retirement that seems a long way off.
Average Savings for Members of Gen Y
According to the Employee Benefit Research Institute  (EBRI), those aged 25-34 are the least likely, among age groups surveyed, to have saved for retirement. While 55% report that they save for retirement , that doesn’t mean that they are saving enough. Indeed, the EBRI survey found that only 24% of those aged 25-34 have at least $25,000 in their retirement accounts right now. Even contributing $1,000 a month for the next 35 years, it will be difficult for members of Gen Y to hit $1 million. The stock market will have to do very well indeed.
Gen Y and the Challenges Members Face
Saving for retirement as a member of Gen Y has its own issues. One of the biggest issues is employment. The Bureau of Labor Statistics reports that the unemployment rate among members of Gen Y is between 1/2 and 1 percentage point above the national average. According to information from the U.S. Census, those aged 25 to 34 have seen an 8% drop in income since the end of 2007. The very fact that members of Gen Y are struggling with employment and income presents a challenge to the ability to set aside money for retirement .
Another issue is Social Security. Baby Boomers have the advantage of Social Security, retirement savings, and — in many cases — pensions. Members of Gen X rely more on 401(k)s than on pensions, but the Social Security is still a possibility. However, the Congressional Budget Office recently estimated that trust fund assets will begin dropping in 2023, and be exhausted in 2036. So, not only is it difficult for members of Gen Y to set aside money for retirement, but they are also likely to have less help during retirement than many of their predecessors.
What Can Members of Gen Y Do to Improve Their Chances?
Members of Gen Y need to take steps to improve their chances for a reasonable retirement. Technically, I’m a member of Gen Y (although I identify more with Gen X), and I’ve seen some of the challenges. However, I’ve been able to get around some of them with the help of owning my own business, and investing using a Roth IRA .
Members of Gen Y need to look for ways to boost their retirement savings. One of the most effective ways to do this is to start a business. Recent difficulties in the job market indicate that members of Gen Y can’t rely on employers to provide them with what they need to succeed with retirement. There are a number of different options for self-employed retirement plans , and members of Gen Y might need them if they plan to catch up with their future.
What do you think are the challenges facing Gen Y with regard to retirement? What do you think members of Gen Y should do to address the problem?
(Photo: Tax Credits )