Investors younger than 30 are quite confident about retirement, with 85% saying they believe they will be able to have the kind of lifestyle they would like to have in their golden years, E*TRADE found in a survey.
Seventy-six percent think they will be able to retire by the age of 64. For 45%, retirement is the top priority for long-term saving, and 85% are saving more than 5% of their income in a retirement account.
However, it is not all clear sailing for these young people. Sixty-nine percent believe that housing costs are a barrier to saving for retirement. Sixty-six percent say the same thing about student loans, and 63% about other educational expenses. Fifty-four percent have dipped into their retirement account, and among this group, 74% regret having done so.
“It is great to see young investors focused on their retirement goals and beginning to save early, as the power of compounding returns is significant for this group,” says Mike Lowengart, vice president of investment strategy at E*TRADE Financial.
Lowengart offers advice on what young people should do to improve their situation, starting with planning on increasing contributions as they grow older and see their salary increase. Second, always save at least as much as the company match, as otherwise, this is free money left on the table. Thirdly, consider putting at least some money into a Roth 401(k) or individual retirement account (IRA). Fourth, Lowengart says, resist the temptation to time the market.
E*TRADE conducted the online survey of 164 young adults between the ages of 18 and 29 who manage at least $10,000 in an online brokerage account in early April.
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