Millennials haven’t had the smoothest financial path, and many still feel unsure about whether they’re saving enough for retirement. With high student loan balances, steep housing costs and a string of economic disruptions throughout their working lives, it’s no wonder this generation struggles to pinpoint a realistic savings target.
Planners say millennials need frameworks that are simple enough to stick with but flexible enough to adapt as their income grows. Here’s how much they advise their millennial clients to save for retirement — and how to stay on track even when life gets messy.
The Core Savings Target
Experts agreed that millennials need to be saving consistently, but the approach can vary. Christopher Stroup, a CFP and owner of Silicon Beach Financial, encourages millennials to save 15% to 20% of their gross income toward retirement. “It’s simple, realistic and resilient across career changes and market cycles,” he said.
Jay Zigmont, a CFP and founder of Childfree Trust, on the other hand, focuses less on saving percentage amounts, which “don’t reflect personal considerations,” and instead use “milestones.” Saving toward milestone goals makes saving easier. Prioritize paying off debt and building an emergency fund first, and then you can make steady, consistent contributions, he added.
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Benchmarks Millennials Should Hit by Their 30s and 40s
Benchmarks help millennials measure whether they’re on track even when income fluctuates. “I generally recommend aiming for one times [your] annual salary by age 30, two times by age 35, and three times by age 40,” Stroup said.
Zigmont is more concerned that millennials get out of debt first, but once that’s done, ideally in your 30s, “you should be maxing out your 401(k)s” in your 40s. Both approaches acknowledge that retirement savings in the early years may be constrained by debt and instability, but it’s important to reach certain thresholds by midlife.
Calculate an Individualized Retirement Number
While broad rules give millennials a starting point, these planners have slightly different approaches. Stroup plans backward from the client’s preferred lifestyle calculating a 3.5% to 4% withdrawal rate in retirement. Zigmont uses “Monte Carlo simulations” that run numerous different outcomes to account for taxes, long-term care needs and other variables. Personal spending, not income, is ultimately what determines the true savings goal, he said.
Adjustments for Millennials Who Are Behind on Savings
For millennials who feel behind, both planners emphasized that the solution is strategic recalibration, not to get caught up in shame. Zigmont reassured, “Anyone who feels they are behind or starting late needs to give themselves some grace.”
However, grace isn’t enough to retire on, so eventually, adopting a smart savings plan is key. That may mean temporarily increasing savings to 20% to 25%, redirecting bonuses or equity compensation, or extending work years slightly. “These measured adjustments help them rebuild momentum without straining cash flow,” Stroup said.
High Costs of Living Affect Savings Targets
With millennials grappling with higher costs of living, both planners stressed that even reduced contributions will make a dent. Consistency matters more than a set amount if you don’t have a lot to put away.
During high-expense seasons even contributing just enough to capture the employer match is better than nothing until your income goes up, Stroup noted. “High fixed costs mean we focus on maintaining consistent contributions, even if lower than ideal,” Stroup said.
However, it may also require looking more closely at your expenditures and retooling a budget. Zigmont said, “If you are living paycheck to paycheck, something needs to change, often meaning paying off debt as a priority or moving to a lower-cost-of-living area.”
Minimum Contributions Millennials Should Make — Even in Tough Years
Both planners agree on one non-negotiable: Never leave employer match money on the table. If millennials can’t save more, gradual increases tied to raises or automation can help them progress without budget shock.
“The minimum is whatever captures the full employer match, since it’s essentially a guaranteed return,” Stroup said.
The Biggest Misconceptions Millennials Have About Retirement
Stroup sees many millennials assuming they can catch up later or wait for perfect timing, but this is a mistake. I think the biggest misconception is that you must retire at 65 [which] is not a magic age,” Zigmont insisted.
Stroup said he sees people assuming they can “save more later” when expenses, particularly healthcare, rise with age.
The antidote is emphasizing consistency and long-term planning — not timing markets or waiting for life to get easier.
Why Millennials Must Plan For Longer, More Expensive Retirements
Longer lifespans and soaring long-term care costs means millennials will need to plan for more retirement years than their parents did. “Many millennials will likely live into their 90s, so planning for a 30-year retirement is increasingly normal,” Stroup said. That requires higher savings earlier and stronger investment strategies.
Zigmont stressed that you’re not ready to retire until you have a plan for long-term care, either to self-pay or buy long-term care insurance.
No matter where millennials start, planners agree that steady habits and personalized strategies are what ultimately turn long-term retirement goals into a reality.
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This article originally appeared on GOBankingRates.com: Retirement Planners: Here’s How Much I Tell My Millennial Clients To Save For Retirement
