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The Surprising Reason Younger Workers Aren't Saving for Retirement – The Motley Fool



Setting funds aside for retirement is not a directive aimed at older workers. Quite the contrary: Younger workers are also advised to contribute steadily to their IRAs or 401 (k) to give their money the maximum time to grow.

Unfortunately, younger adults have a knack for making excuses than to why they're not saving. Some of them are their student loan payments, and the fact that they monopolize too much of their income. Others blame stagnant wages coupled with rising living costs. But these days, growing numbers of young adults are neglecting their nest eggs for a different reason: They are convinced the planet is doomed.

 Young woman sitting on a ledge and looking out a window.

IMAGE SOURCE: GETTY IMAGES.

An estimated two-thirds of millennials have no money set aside for retirement. But for savings, savings are intentional. Those who fear the planet are more likely to lose their savings due to their ability to physically thrive in the future.

Not convinced? Consider this: An estimated 72% of millennials say that their emotional well-being is impacted by the scary direction climate change is taking, according to the 2018 report from the American Psychological Association. Meanwhile, only 57% of adults over 45 suffer from similar anxiety.

Of course, there is no change in climate change will ultimately be in store for millennials, or our planet, over the course of the next century. But one thing is for sure: If younger workers don't start saving, they won't have much to look forward to in retirement, regardless of how well the planet is faring at that point.

Let's not give up on the future

Though climate change is a scary notion, retiring with savings to pay the bills is an equally frightening prospect, especially since Social Security can't sustain seniors by itself. Fortunately, if there's one thing millennials have going for them, it's time, which means that starting out with absolutely nothing in the way of savings still have an opportunity to catch up.

Check out the following table.

Monthly Retirement Plan Contribution

Total Accumulated Over 40 Years at a 7% Average Annual Return

$ 200

$ 479,000

$ 300

$ 719,000

$ 400

$ 958,000

$ 500

$ 1.2 million

$ 600

$ 1.43 million

% average yearly return used above is a reasonable assumption for savers with a stock-heavy portfolio, since it's a couple of percentage points below the market's average. Anyone with a 40-year savings window should feel very comfortable loading up on stocks and using them to generate wealth. [Ofcourseit'shardtopushoneselftosavewhenthoughtsofthefutureareoverwhelminglybleakButratherthangiveuphopemillennialsshouldinsteadaimtostrikeareasonablebalancebetweenenjoyinglifetodayandsecuringasolidincomestreamfortheirgoldenyearsIflawmakerscrackdownchangesensueandourplanetthrivesdespiteallthepredictionsstatingotherwisetoday'syoungerworkersaregoingtohaveabigmoneyproblemontheirhandswhentheymakeitoldageandrealizetheystillhaveseveraldecadestogo


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