When it comes to retirement savings, Americans are behind. 66% of households have less than $100,000 saved for retirement. Fortunately, young people have time to take advantage of various savings options.
Millennials are mostly unaware of their options for putting money away for their futures. While many have money in 401(k) accounts through their employers, they may not be aware that there is a risk of losing money with this type of investment. They may also not feel confident handling the details of their 401(k) on their own.
Conventional wisdom says that large-cap stocks return 12% and young people should aggressively invest because they have so much time to recover from potential losses.
Robert Powell, the editor of TheStreet’s Retirement Daily, says that a target date fund may be a better option. It is a good investment option for people who don’t feel confident enough in their knowledge of investments to make asset allocations. Anyone who knows their anticipated date of retirement can choose this option and let the account rebalance allocations automatically.
New technology teach people who aren’t comfortable with investing their money how to do so in an easily digestible way. Millennials have the opportunity to take the attitude of a student while realizing that they could lose money on their investments.