You want to buy a home, but you haven't been saving for one. You want to retire near the typical retirement age, but you haven't been saving for that, either. Don't worry, the homeowner and retirement fairies will be pulling up to your door soon to deliver a truckload of cash.
Absurd, isn't it? Nobody believes in homeowner or retirement fairies – but a sizable number of Americans act like they do.
A recent Business Insider and Morning Consult survey found that 25% of millennials who expect to retire between the ages of 66 and 75 don't have any retirement savings at all. Over half of all millennials (52%) have no retirement savings account, but 46% of that group expect to retire between 56 and 75 and 12% of them expect to retire before age 55.
A separate Morning Consult survey revealed that 36% of millennials don't currently save for retirement, and 31% of those who do only save between 1% and 10% of their monthly income for retirement.
Millennial homeownership goals are equally shaky. Approximately 31% of millennials who expect to own a home haven't started saving for it yet.
At least millennials (ages 22-37) are young enough that they have time to recover. Members of Generation X (ages 38-53) have less time to correct a poor savings approach, and baby boomers (ages 54-72) are almost out of savings time.
As with millennials, almost half (47%) of Gen-Xers don't have a retirement account. A similar percentage of the savers (48%) have less than $50,000 in their savings account. Maybe that's why 10% of Gen-Xers think they will never retire. That's the highest percentage of any generation, even more than the baby boomers nearing retirement age.
A separate MetLife survey presents a similarly gloomy picture of Gen-Xers and retirement. MetLife found that 18% of Gen-Xers don't expect to retire, compared to 12% of baby boomers and 14% of millennials. Almost half (48%) of Gen-Xers were living paycheck to paycheck.
For sheer delusion, it's hard to beat the 12% of baby boomers who don't already own a home and want to purchase one but aren't saving for it. At the very best, they'll probably be taking on significant debt heading into retirement because of smaller down payments. At worst, the math simply doesn't add up and their realistic opportunity for homeownership has passed.
Every generation has blind spots when it comes to saving for homeownership or retirement – even yours. We all have scenarios that we don't like to contemplate, but the situation won't improve without a realistic assessment.
How's your down payment situation? Are your retirement funds on track? If you're running short on one or both, you'll need a better plan than fairies or lottery winnings. Hard work lies ahead.
Set a target dollar value and a date to buy a home or retire and work backward. How much will you have to save each month to reach your goal?
Next, review your budget (or create one if you don't have one). Look for ways to cut expenses and pay down debt or bring in extra income. You can't save for anything if you spend more than you make each month. If you want to reduce your interest payments and lower your debt, join MoneyTips and use our free Debt Optimizer tool.
If you can't realistically make that goal, it's time to change it. Perhaps you can buy a smaller home or work a few more years to achieve your goal. MoneyTips is happy to help you get free mortgage and refinance quotes from top lenders.
Planning and hard work will help you meet your retirement and homeownership goals. Fairies and lottery tickets will not.
People with better credit can save more for retirement because they pay less in interest. You can check your credit score and read your credit report for free within minutes by joining MoneyTips.