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Your Financial Life
By David Dorion / Feb 23, 2015

Millennials and Their Finances: An Interview With Kimberly Palmer

 

Are_Millennials_Saving_For_Retirement

ClearPath – Your Roadmap to Health & Wealth recently broadcasted an extended edition show, highlighting Millennials and what they are doing to prepare for their future retirement security. In addition to regular program hosts Greg Tucker, Catherine Collinson (President of the Transamerica Institute®), and Hector De La Torre (Executive Director of the Transamerica Center for Health Studies®), Kimberly Palmer joined the show as a special guest.

Kimberly Palmer writes about personal finance for US News & World Report, where she is a senior editor. She is also the author of two finance books, The Economy of You: Discover Your Inner Entrepreneur and Recession Proof Your Life and Generation Earn: The Young Professional’s Guide to Spending, Investing and Giving Back. Follow Kimberly at @alphaconsumer.

Palmer spoke of the many hurdles faced by Millennials that can prevent them from properly preparing for their future, such as student loans and credit card debt. She suggested that they feel “disconnected” from their future selves in terms of retiring in 40 to 50 years.

“Millennials do feel like they need to start saving for the short-term by establishing an emergency fund,” she explained. “They have a list of financial priorities, and it’s not easy to juggle them, to know what to focus on first.”

It was highlighted in the interview that Millennials who do start saving at a young age, could have a substantial amount by the time they retire. It was also mentioned that the monetary difference between a 25-year-old saver and one who starts at 35, could be as much as $500,000 in additional retirement funds for the 25-year-old. This is why saving early is so important. Another way to think of it is, “If you start when you’re 25 you can actually save less per month than if you wait,” said Palmer.

Millennials, having witnessed the economic downturn, might be apprehensive about financial planning even as the economy recovers. “Millennials are really scared to invest in the stock market, so they’re holding back. Their investments are way too conservative given their age. And so they need to develop more trust,” said Palmer.

Palmer offers three tips for Millennials and their future financial goals.

First, take advantage of workplace benefits. “A lot of people just let these go. They’re not getting their matches on their 401(k)s. So number one is to see what you’re eligible for and sign up,” she said.

Second, avoid getting overwhelmed by financial obligations. Instead, figure out what is important. “Get organized so you know, okay, number one, I do have to make sure I’m paying my student loans each month; I do have to start an emergency fund; I need at least a plan for paying off my credit card debt,” advises Palmer. “Make a binder or do it online, whatever you’re most comfortable with, to get your financial paperwork in order,” she added.

Lastly, Millennials need to invest slowly. “Whatever your goal is, whether it’s saving more money or paying off debt, make a really small change this month. Then you can expand that shift the following month and just take it slowly.”

It’s never too late to start saving for your future plans. Just remember, the sooner you begin, the better. At the same time, don’t overwhelm yourself. Instead, ease gently out of debt, and eventually into the market. As a Millennial, you have many strong and healthy years ahead to work and secure your financial future.

About Transamerica Center for Retirement Studies®

The Transamerica Center for Retirement Studies® (TCRS) is a division of Transamerica Institute®, a nonprofit, private foundation. The Transamerica Institute is funded by contributions from Transamerica Life Insurance Company and its affiliates and may receive funds from unaffiliated third parties. For more information please refer to www.transamericacenter.org and follow TCRS on Twitter at @TCRStudies.

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