Between student debt and part-time work, what Millennials should do now to save for retirement

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• JUDY WOODRUFF:

  This year, millennials, the group roughly 18 to 34 years old, will overtake baby boomers as the largest living generation in the country. And even at the dawn of their careers, it turns out they are more worried about retirement than previous generations. And perhaps they should be.

  Here to help fill in the picture, Jen Mishory. She is executive director of Young Invincibles. It's a research and advocacy group for young adults. And David John, he's a senior policy adviser with AARP. He also works on retirement issues at the Brookings Institution.

  And we welcome both of you to the NewsHour.

• DAVID JOHN, AARP:

  Thank you.

• JEN MISHORY, Young Invincibles:

  Thanks so much for having us.

• JUDY WOODRUFF:

  So we know today the average retirement age for men is 64. For women, it's 62. And we also know that studies are showing that most millennials expect to retire, they say, by age 65, but they plan to keep on working while they're in retirement.

  Jen Mishory, how much are they thinking about retirement, this generation?

• JEN MISHORY:

  Yes, absolutely.

  Young people are thinking about retirement today. When young people, for example, have access to a retirement account, they are actually saving at relatively consistent rates. The problem is we're actually not seeing young people accessing things like retirement accounts at the same rate.

  So only about half of workers have access to that kind of traditional retirement account. Young people, 25 percent of young people are part-time workers, so you're seeing just fewer and fewer young workers having access to those kinds of mechanisms to actually save and at the same time struggling with things like student debt, struggling coming out of this recession.

  So we're looking at a problem also around wealth accumulation.

• JUDY WOODRUFF:

  Sounds like a very mixed picture.

• JEN MISHORY:

  Yes.

• JUDY WOODRUFF:

  David John, what would you add to that in terms of how much they're thinking about retirement, why they aren't or why they can't and why they want to?

• DAVID JOHN:

  Well, one of the things is millennials have learned from what happened to their parents. And they have seen the struggles that their parents went through when their retirement accounts were hit in 2008, for the most part.

  They are — when they have access — and that's a crucial thing — when they have access to a retirement payroll deduction at work, they are saving and they are participating and they are much more interested than, say, previous generations were at this stage of life.

• JUDY WOODRUFF:

  At this stage.

• DAVID JOHN:

  Yes.

• JUDY WOODRUFF:

  Either Gen X, which is the next older generation, or certainly the baby boomers.

  We have got another I think statistic we want to show. Polls are showing 70 percent of millennials are already saving for retirement; 81 percent of them say they are worried that Social Security won't be there for them.

  Jen Mishory, how much do we know about how retirement is going to look different for this generation than it does today?

• JEN MISHORY:

  Yes. I think it's important to take account of sort of the broader economic picture facing millennials.

  So, we're talking about $1.2 trillion in student debt. The average debtor walks off a college campus with $30,000 in student debt. Tough to put that amount aside in savings when you're figuring out how you're going to actually pay down that debt. We're also talking about wages that have been dropping actually twice as fast for young workers than older workers.

  We're seeing an economic picture that's tough for this generation to then be thinking about socking away money for the long term. I think it's a question mark as to whether or not young people are going to be able to get there and get to a place where they do have that nest egg when they're looking for retirement.

• JUDY WOODRUFF:

  So, given those obstacles, David John, how are they putting money aside when they're able to? What does it look like?

• DAVID JOHN:

  Well, when they are able to, they're participating in 401(k)s or IRAs if they're offered by their employer, but at best, roughly one out of two workers actually has that opportunity at the workplace.

  If they don't have that, and this is true across generations, most people don't save for retirement. Roughly one out of 20 actually does.

• JUDY WOODRUFF:

  Do you — I mean, is there advice you typically would give, David John, to young people as they're thinking about it? Because I think, for many young people, when they look at income limited at this stage, how much the cost of housing is, they may wonder, is this really something I can afford to do?

• DAVID JOHN:

  They would wonder that, yes, and just as people did when I was younger, but starting younger is actually the smartest thing they can possibly do.

  If you start to save at a young age, you can save a smaller proportion of your workplace income, and you can actually get to a good place much easier. If you start later, you're going to have to save a higher percentage of your income, and the odds are you are not going to make your goals.

• JUDY WOODRUFF:

  Let's talk a little bit more about the financial obstacles facing them.

  We know that 41 percent of millennials expect to — they have said in a poll they expect to financially support their parents. And you mentioned this a minute ago, Jen, the average millennial, $115,000 in student loan debt over the course of a lifetime. You cited a really kind of jaw-dropping number.

  That really does cloud the picture for them over the years, doesn't it?

• JEN MISHORY:

  Yes, that's right.

  I mean, I think that, first of all, you're right to talk about, you know, what we're looking at in terms of a parent, a grandparent. When young people are thinking about how they're saving, how they're supporting their parents, how for a while during the great recession a lot of young people were living at home, how parents are supporting this generation, it's really a holistic family picture when they're thinking about the broad financial challenges.

  But, absolutely right, It's tough when you're figuring out, do you put that extra $100 toward a student debt payment or do you put it into a retirement account? Those are sort of the tough decisions that young people are facing, again, often don't have access to a retirement account when they're working, might be working part-time. A larger percentage of young workers are contingent workers, part-time workers.

• JUDY WOODRUFF:

  David John, what about the people who are in a position to make a difference in terms of public policy right now for these young people when it comes to planning?

  We know Congress in Washington hasn't been able to do a whole lot about Social Security or Medicare. There are a lot of people very worried about that. In terms of this younger generation, what do they need policy-makers to be thinking?

• DAVID JOHN:

  What they really need more than anything else is to have access to a retirement savings account.

  As I say, payroll deduction is absolutely essential to get into the savings habit. And savings is a habit, just like physical exercise. The thing they need to do is to be able to move their retirement accounts easily from job to job, because we know millennials are switching jobs somewhat faster than previous generations.

• JUDY WOODRUFF:

  And, right now, that's not always something that's easy or…

• DAVID JOHN:

  It can be very difficult.

  And then, last but not least — and this is true across generation — we need to think much more about what happens when you reach retirement and you have got a lump of savings that is probably more than you have ever had in your life, but how do you make that stretch out and last until the end of your life?

• JUDY WOODRUFF:

  So, Jen Mishory, in the few seconds we have left, what's the main advice you would leave this younger generation with when it comes to thinking about the future?

• JEN MISHORY:

  Yes, I think a lot of millennials are there, right? They are — those that have access are saving. They are realizing this is important.

  But I also think that it's important to be thinking about retirement in the long term, but also about how you're managing student debt, which is a real obstacle and it is a real question, so I think thinking broadly and holistically about the economic picture that you're facing, and then figuring out what makes the most sense to you on a month-to-month basis.

• JUDY WOODRUFF:

  How old do you think you will be when you retire?

  (LAUGHTER)

• JEN MISHORY:

  It's hard to say at this point. Really hard to say.

  (LAUGHTER)

• JUDY WOODRUFF:

  It's a long way off. I can say that.

  (LAUGHTER)

• JUDY WOODRUFF:

  All right, David John and Jen Mishory, we thank you both.

• JEN MISHORY:

  Thanks so much.

• DAVID JOHN:

  Thank you.