12:56 PM Eastern - Monday, July 9, 2012

Baltic or Boardwalk: What Does the Future Look Like for Millennials? #retirement-security

What does the future hold for over 2.5 million young Americans who recently marched across the stages of their colleges and universities into the "adult world?"

If the status quo holds, Millennials may find themselves more economically insecure than today's seniors when they reach retirement age, according to Robert Hiltonsmith, a retirement policy expert with Dēmos.

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"Over the last generation, our society has shifted the burden of an unprecedented set of risks onto individual workers, and the Millennials will be the first generation to suffer the full brunt of that shift," says Hiltonsmith.

Millennials face an unprecedented volatile mix of grim employment and earnings prospects (even for college graduates), massive student loan debt, and soaring medical costs that will make it harder for them to save for retirement. However, the biggest barrier preventing young workers from adequately saving for their Golden Years are the 401(k)-style defined contribution plans and IRA plans replacing traditional pensions in the private sector.

"Between the risks of an uncertain stock market, poor investment choices, savings-depleted early withdrawals, and the high fees of many 401(k) plans, it will be difficult to impossible for the majority of Millennials who only have these plans supplementing Social Security to save enough to retire with dignity, let alone comfort," said Hiltonsmith.


According to Dēmos, the federal government could begin restoring some measure of retirement security to workers by allowing states to create a new type of secure, low-cost retirement savings account.

So what happens to Millennials if the government doesn't explore new retirement models to provide more workers with protection against outliving their savings?

"Here's the most likely scenario: this generation, larger even than the Baby Boomers, will reach retirement age in 40 years with nearly no retirement savings. Most will retire with Social Security (which will hopefully still be there for them) as their only source of retirement income, drastically raising elderly poverty, potentially to even pre-Social Security levels," warns Hiltonsmith.

"Is this the future that our country wants for its young people? I sure hope not. But we better take action -- big drastic, systematic action - soon if we're to have hope of avoiding it."

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