Millennials are facing unique financial challenges because the fallout from 9/11, the Great Recession and skyrocketing higher education costs. They are being compared to the generation of Americans who emerged from the Great Depression with low risk tolerance who continued to invest conservatively their entire lives. LifeHealthPro’s Peggy Bresnick says that “Retirement planning should start now for financially beleaguered Millennials.” Millennials range in age from 18 to their early 30’s right now, so some may be more concerned with financial issues than others. But many are struggling to find a financial balance. A recent study found that 31% of Millennials still live with their parents. This is because some couldn’t find jobs after college or jobs in their chosen field and others are drowning in debt. Starting your career during an economic downturn has financial consequences that can last for the rest of your life. These are some of the reasons that Millennials might have to work a little harder to find financial independence.
This generation is behind on retirement savings, not unlike the generations older than them. The Indexed Annuity Leadership Council (IALC) found that 37% of Millennials have yet to save any money for their retirement. But they do know that they will have to rely partly on their personal savings to pay for retirement. Millennials plan to use that savings, a 401k account and IRAs to finance their retirement. But 25% of them owe more more money than they have saved right now. In addition to those savings plans, Millennials are very open to alternative ideas for creating retirement savings and income. Fifty-two percent of them have shown interest in fixed indexed annuities. This is more than any other age group surveyed. Fixed indexed annuity products allow you to save for retirement and take advantage of market increases while protecting your principal from market declines.
USA Today reported that the average fixed indexed annuity buyer during the first quarter of this year was 62 years old. That’s certainly far above the age of Millennials. Advisors have been focusing their attention on these younger Baby Boomers who are getting ready for retirement and could benefit from the income offered by fixed indexed annuity products. Millennials, however, might also be a good market to focus on for these low risk products that are of interest to this rather financially conservative and risk averse younger generation. Millennials are likely to become a large part of the market for fixed indexed annuity products going into the future. They desire a way to save for retirement and create income that will protect their savings from risk and allow it to grow before they need the income. Indexed annuities might be a good solution for risk-averse Millennials.
Written by Rachel Summit