I’M A MILLENNIAL AND I HAVEN’T SAVED FOR RETIREMENT

My name is Haley, I’m a millennial and I’m about to start my third (and last!) year of law school. Like many people, my life is full of deadlines, time with friends, thoughts of student loans and plans for the future. My impending graduation means that I’m also getting ready for my first permanent, full-time job (aka my induction into full adulthood). As with all big life changes, I have a lot to think about—and a lot to worry about. Source: NLG


I can get an impressive amount of worrying done between 12am and 1am. Long after I should be asleep, I’m worrying. I’m worrying about things I can do something about (hello, 3am bill payment), and I’m worrying about things I can’t do anything about (my student loans will still be there in the morning… unfortunately). But, you know what I don’t worry about? Retirement.


That’s not because I’ve been saving for retirement since that first lemonade stand. It’s because I don’t have a full time job… and because I haven’t finished school… and because I have student loans to pay off… the excuses are endless and I’m sure you can add a few of your own. It’s easy to justify not saving for retirement yet (it is 40 years away, right?).


But even at 24, I have every reason to be concerned about that $0 balance in my retirement account. If you’re not convinced, think of it this way—money saved for retirement now will accumulate interest over the next 40 years. A little saved today has the potential to be a lot 40 years from now.

So I ask—have you started saving for retirement? If you haven’t, you’re not alone. According to the Indexed Annuity Leadership Council, one in three millennials hasn’t started saving for retirement and one in four of us owe more money than we have saved (guilty!). If you have started saving, try out this retirement calculator to see if you are saving enough.


Millennials (those currently between the ages of 18 and 34) have some good reasons for not saving for retirement. We also lived through the Great Recession in 2008 and watched as our parents and grandparents lost up to a third of their retirement savings to the market downturn.


Looking closer into millennial retirement savings, Fortune reports that only half of millennial women are saving for retirement compared to 61% of millennial men. Not only are fewer millennial women saving for retirement, but we are saving HALF as much as our male counterparts. This disparity in retirement savings is due in part to the pay gap (women are earning $0.77 for every $1.00 men earn), and the fact that more millennial women work part time than millennial men and carry more student loan debt.4


Even with these discouraging statistics on millennial retirement, I still won’t be worrying about retirement because I have a solution: fixed indexed annuities.

The annuity’s floor protects against market risk by guaranteeing* that the annuity will not lose value in the event of another prolonged market downturn. This is an important feature for millennials who are reluctant to subject their retirement savings to the volatility of the stock market. Another feature common to all fixed indexed annuities is that they can provide guaranteed lifetime income, reducing the risk of outliving retirement savings.


Fixed indexed annuities are a long-term savings option and are not considered to be liquid assets; but one type of annuity, called a flexible annuity, may be an attractive option for millenials and others who have income they can save, but few assets. A flexible annuity allows us to start contributing what we can now (maybe $50/month?) and as we start paying off those student loans and start earning more money, we can contribute more and more each year.

Voila! With a fixed indexed annuity, we can start saving for retirement in a way that meets our needs now and in the future.

Full disclosure: neither I nor any financial calculator can predict the future. But, a flexible annuity is a great option because it meets our needs as millennials and it comes with the peace of mind of knowing that we are doing something to prepare for retirement. For me, that peace of mind means not adding the need to start my retirement savings to the list of things I worry about. What would that peace of mind mean to you?

*Guarantees are based on the claims paying ability of the company issuing the annuity.

An Indexed Annuity (IA) is usually a fixed annuity whose interest is determined, at least in part, by the performance of a specified index of the market. Unlike traditional fixed annuities, the policyowner may receive zero interest for a single period on a specific premium payment if the index performs poorly. However, with most designs, the premiums are protected and guaranteed to grow over time, and the owner of an equity indexed annuity may experience better interest crediting than a traditional fixed annuity during periods when the market performs well. Indexed annuities do not directly participate in any stock or equity investments. An investment cannot be made directly into an index. Most IAs permit owners to participate in only a stated percentage of an increase in an index, and also impose a “cap rate” that represents the maximum annual account value percentage increase allowed to contract owners. Because they are meant for long-term accumulation, most annuities have surrender charges that are assessed during the early years of the contract if the contract owner surrenders the annuity. In addition, withdrawals prior to age 59 ½ may be subject to a 10% Federal Tax Penalty. The guarantees of annuity contracts are contingent on the claims-paying ability of the issuing insurance company. All withdrawals made from annuities with pre-tax contributions are taxed as ordinary income. All withdrawals from an annuity purchased with non-qualified monies are taxable as ordinary income only to the extent there is a gain in the policy. This is not a solicitation of any specific annuity contract.


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