A financially secure and stress-free retirement requires careful planning as well as persistent saving and investing throughout your entire working career. Those who start early are more likely to achieve this goal. However, a stunning number of Americans aren’t hitting the mark.
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Morningstar’s 2024 Beyond the Retirement Crisis Headlines: Why Employer-Sponsored Plans Are the Key to Retirement Adequacy for Today’s Workers study indicated that across the U.S., approximately 45% of American households will run short of money in retirement. Females who are single at retirement are at an even higher risk than single males and couples.
However, the study also shows that millennials specifically are making one retirement mistake that could seriously hurt their retirement prospects.
Many Millennials Aren’t Participating in a Workplace Retirement Plan
It was found that 57% of millennials, along with their Gen X and Gen Z counterparts, who are not participating at all in a defined contribution (DC) retirement plan may run short on money in the future. This is compared with only 21% for those with 20 or more years of future participation in a DC retirement plan.
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Not participating in a DC retirement plan as early as possible is a financial mistake. This is especially true if your employer offers a dollar-for-dollar match on your 401(k) contributions — you’ll essentially be leaving free money on the table.
The longer you wait to start saving for retirement, the less likely it will be that you retire on time or that you’ll have the money you need to sustain yourself as you age. It’ll be more likely that you’re forced to work well beyond the full retirement age (FRA) of 67.
Don’t procrastinate, start saving today — your future retired self will thank you.
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This article originally appeared on GOBankingRates.com: The One Retirement Mistake Millennials Are Making and How To Avoid It