By the time many Gen Xers or Baby Boomers were in their thirties or forties, they had bought a home and were saving for retirement. But today’s core working age Americans are not so fortunate.
Millennials are increasingly reporting that they feel forced to choose between owning a home and building a secure retirement, according to a new survey from Nationwide Retirement Institute and The Harris Poll, released this week.
More than half (58%) of respondents said they face that choice with many citing the rising cost of housing as the central obstacle to financial freedom. Over a third of respondents cited housing prices as their biggest barrier to retirement readiness, while nearly half pointed to mortgages and home equity debt as major threats to long-term financial security.
While buying a home has often been a cornerstone of wealth building, the data suggests younger investors are rethinking that formula with 68% saying they have already adjusted their retirement plans this year in response to escalating housing expenses.
Despite the challenges, half of poll participants have opened a retirement account such as a 401(k) or IRA, and more than one in five have started a brokerage account, with 28% expecting to boost their workplace retirement plan savings, and 23% intending to maximize employer matches.
However, 22% worry that their retirement funds will run out within 14 years, and one in ten believe their nest egg is already shrinking.
The survey reveals that nearly half of millennials see housing costs as their biggest financial threat, but only 9% of financial professionals recognize it as a major risk.
Advisors overwhelmingly cite health care expenses and uncertainty about government programs such as Social Security and Medicare as the top financial threat, issues that only a small fraction of millennials currently rank as critical.
Nearly half of respondents already pay for professional financial advice, and most of them began those relationships within the last year. Additionally, more than six in ten say they’re open to using guaranteed-income products such as annuities as part of their strategy.
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