The following is a guest post from Riley at Young and the Invested.
Everywhere you look, Millennials seem to be killing something. Whether it’s traditional products, definitions of convenience, working demands, or some other societal convention -- we constantly receive a bad rap.
Despite this, we manage to get by. Though I’ll admit to seeing some chronic problems among my peers when it comes to establishing good financial habits. Nobody’s perfect. I’m certainly not without error.
Things as common as living within our means, saving money, or setting aside enough to fund a traditional retirement fully. We make a lot of mistakes with money it would appear.
But why is that? What is driving this? Allow me to share my perspective as a millennial.
What We Want
I’ll be the first to confess, much like my peers, I don’t enjoy the idea of delaying my gratification and saving consistently to reach some eventual goal 30+ years in the future. If pressed to place blame, I’d highlight things like long-term unpredictability, social media, and our on-demand culture.
However, allow me to say this clearly: I don’t pretend to speak for my generation. These are just some of the drivers I see -- ones I don’t see going away anytime soon.
Regardless of the culprit, it doesn’t look as though we’d do well with a modern marshmallow test. Instead, we desire a life of convenience and immediate fulfillment because we have a high discount rate on what the future will provide.
Simply put, we don’t know what tomorrow will hold. For a generation who’s hooked on binge-watching television shows seasons at a time, we aren’t the most patient bunch.
I don’t say this to shirk responsibility for being patient. Rather, this post intends to demonstrate how we operate the best we can within our expectations for what life can deliver and what we’ve come to expect based on other areas of our lives.
Understandably, our circumstances differ from those who came before us. What we have come to expect above all else are convenience, low-costs, and choice.
Preferably, we’d want these all wrapped up in an unforgettable experience, because they tend to make us happier. In short, we want a life with fulfilling experiences at a reasonable price when we want them.
Retirement, What Retirement?
After seeing how the traditional demands of life have changed, why would this not also extend to reshaping our definition of retirement? What I have come to find is I do not enjoy feeling constrained in my decision-making. But then again, who does?
I think Millennials feel acutely annoyed by restrictions because we’ve grown up in a world where convenience is king. We constantly seek methods to automate, scale, and reduce time commitments to time-intensive tasks when more expedient options exist.
From a retirement perspective, this means not wanting to stick to a strict schedule. Why wait until our golden years to hit travel the world without consequence when we can travel hack with help from Reddit Churning there for less?
What millennials desire is to expedite our financial security thereby allowing us the independence to make decisions irrespective of financial concerns. This would change our path and free us from a traditional retirement course.
Why do we want this? The reasons should be self-evident: we want what we want when we want it. That means cashing in those freedom chips sooner rather than later.
After all, because we don’t know what tomorrow will hold, we want to live more today. This makes us more inclined to delay gratification a bit less than our predecessors. YOLO (you only live once), right?
Reaching Financial Independence Sooner Than Traditional Retirement Age
Millennials must confront unique resistances other generations didn’t have to face. Namely exorbitant student debt, stationary wages, increasingly-expensive homes, and impediments in career advancement.
As a result, I’m not of the mindset traditional financial advice applies to our generation in the way it did to our predecessors.
When people advocate for saving 10% of your earnings in perpetuity and relying on Social Security and Medicare to cover the rest in retirement, I’m not certain this will be enough for us to live comfortably in retirement.
Because we cannot afford to start saving for retirement as early as previous generations (see problems above) and we have less certainty of having entitlement programs existing in their current forms, we need to find another way to reach retirement.
As such, I advocate for pursuing financial independence rather than a traditional retirement. And in order to do so, we should:
- Develop unique, in-demand skills to take up side hustles. Doing so will provide lucrative opportunities to reach financial independence sooner.
- Make investments in assets which provide passive income to cover our costs of living. This can come from investments like dividend-paying stocks, buying rental real estate like condos or apartments, or finding alternative investments which provide diversification for your investment portfolio.
- Learn to live within our means. By living on a budget, we can begin to improve our financial picture and prioritize the items in our lives which create sustaining happiness.
- Discover how to build wealth through investing in index funds. Building wealth begins with making wise choices, allowing those to play out over time, and remaining invested for the long-term. Compounding returns over extended periods of time are the surest pathway to wealth.
Financial Independence Sooner than Traditional Retirement Later
Using these four actions to guide your route to financial independence will be easier said than done. Inevitably, all take time to develop but can be accomplished by anyone dedicated to living in a more financially-savvy way.
These should items can easily combine to cover our cost-of-living as well as leave room for financial growth. And because our efforts compound, I suggest seeking financial independence sooner, rather than later.
Looking at retirement in this manner will help millennials reach a state of financial peace of mind. However, getting there requires steps which greatly differ from conventional retirement advice.
Learning and adopting these strategies will free millennials to pursue their passions and give them the lives they want.
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