Will Gen Y Be Able to Retire?

The world seems to be unfolding in such a way that will create an interesting dichotomy. There is more opportunity than ever before to create sizable wealth and opportunity (thank you technology and globilization!) but it will be harder for the average person to achieve the success of past generations. More wealth may be in fewer hands, and, as a whole, our generation is facing a daunting task: saving for retirement.

Retirement isn’t a pipe dream, but it’s certainly not a guarantee. Profound changes in the social and economic landscape are combining to make an attainable retirement a luxury that may be had by only a lucky few.

MSN money reports that a survey of financial advisors yielded that Generation Y will need to have a retirement savings goals of approximately $2 million to retire. Indeed the report states that “Generation Y will need to save more than their parents did” to retire.

This task takes into consideration the added costs our generation must make up for such as diminishing employer retirement benefits and heightened collection age of social security. The future will also likely bring about a fundamental shift in benefit coverage as well as an increased stratification of wealth distribution. The result of which will leave many toiling away well into their “golden years.”

One can get a queasy feeling about Gen Y’s retirement prospects by first looking no further than two major plights which uniquely affect Millennials: college debt and social security.  There has been a lot of hoopla about the insolvency of social security. The system is going bankrupt and barring some major overhauls there isn’t much that can be done. This means that money which could be used for retirement is instead being paid into a system that likely won’t provide any return (ouch).

Students are graduating with more debt than at any point in time. According to NPR, students last year graduated with an average of $25,250 of debt!That’s the most in history and the trend is only increasing.

Will it be impossible to retire without a college degree? A college degree is almost becoming a commodity, between both at home and abroad, a higher percentage of college grads are entering the workforce than ever before. But perhaps what is even scarier is how technology is changing the demands for labor.

Low-skilled jobs are disappearing. This is something called “skill biased technological change.” You can read all it about it here or perhaps take a look how it is impacting new college grads here. In many industries, new jobs will benefit the most skilled workers and everyone else will be scrambling for what’s left.

As you might imagine this leads to greater income inequality, which doesn’t exactly paint a rosy retirement picture for anyone who isn’t lucky enough to be in the top percentage of Gen Y.

Adding to the situation is a little trend changing the way we think of employee benefits. The burden of providing benefits such as insurance, healthcare and retirement packages is shifting to the individual.

Providing benefits for employees is expensive and increasing to the point of being unsustainable. We are already seeing increasing employee costssuch as more expensive health plans and companies hiring part-time contractors instead of full-time employees to avoid the need of paying benefits.

Many fear that we are approaching a tipping point, when companies just simply can’t afford to provide benefits anymore. To what extent this may or may not happen is anyone’s guess, but you can be sure that whatever the case may be the future will look significantly different than the present.

To make a long story short: added costs to the individual will make it harder for even those with good jobs to save for a comfy retirement.

So what can we do now to combat these trends and start cushioning our bank accounts for our greying years? There’s a plethora of information out there to help get your savings on track, and what you can do nowmay pay off big in the end, but will it be enough? What else can be done to combat these less than favorable trends?

Will Gen Y be able to retire? What can we do about our situation? Tell us below.