Will Millennials Ever Be Able To Afford Retirement? Here’s What Needs To Change

• Many millennials face significant student debt and rising living costs, limiting savings.
• Gig and freelance work often means fewer retirement benefits, leaving millennials to figure out saving on their own.
• For those with access to employer-sponsored retirement plans, taking full advantage of employer matching can significantly boost savings over time.

If you’re a millennial, the idea of retirement might seem like a distant dream — something your parents talked about while you were busy dealing with student debt, gig jobs, and the ups and downs of an unpredictable economy. 

If you’re not a millennial, you’ve probably heard a lot of buzz about how this generation is facing financial challenges like never before. 

In fact, only 37% of workers believe it’s highly likely they’ll reach their retirement savings target. 

While it’s easy to feel like retirement is a far-off fantasy, it doesn’t have to be that way. 

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There are real steps millennials can take today to build a future where they can eventually step back from the grind, even if that feels like a far off goal.

But first, let’s talk about why many millennials may not be able to retire the way their parents did.

1. Student Debt is a Big Cloud Over Millennials’ Finances

A significant chunk of millennials are still buried under student loans; the average student loan debt for graduates in the U.S. is upwards of $37,000. In other countries like the U.K., while tuition fees aren’t quite as steep, living expenses, rent, and personal loans still pile up.

For millennials, paying down that debt takes up a major chunk of their income, leaving them with less money to put toward savings or retirement accounts. This means they have to get creative when it comes to saving. But creativity doesn’t mean giving up entirely — it just means using the resources available to them more effectively.

2. Gig Economy Jobs: Flexibility or Financial Instability?

For millennials, the gig economy is a double-edged sword. Gig work (think freelance writing, ridesharing, or other side hustles) offers flexibility that traditional 9-to-5 jobs don’t. You can work whenever and however much you want, which is great if you’re trying to juggle multiple income streams.

The downside? No paid benefits, no retirement plans, and no job security. Unlike traditional jobs that offer employer-backed 401(k)s or pensions, gig workers typically don’t have any retirement support from their employers. 

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This puts millennials in a position where they have to be extra diligent about setting up their own retirement plans — often without the guidance of a company to help them do so.

3. The Cost of Living and Stagnant Wages

On top of everything, the cost of living has skyrocketed — especially in major cities. Housing, food, and healthcare costs have outpaced wage growth, meaning millennials have less disposable income. 

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It’s hard to save for retirement when you’re barely scraping by month-to-month, trying to keep up with rent, rising prices and, for many, the astronomical cost of childcare.

So, What Can Millennials Do About It?

While the odds may seem stacked against millennials, they don’t have to give up on retirement altogether. With a few smart strategies, you can still take charge of your financial future. 

Here are some tips to help you get started.

Budget Like a Pro, and Don’t Let Debt and Expenses Control You

The first step to saving for retirement is getting a handle on your spending. Sure, it might not be the fun part, but it’s crucial. 

Start by tracking your income and expenses to get a clear picture of where your money is going each month. Apps like Mint or YNAB (You Need A Budget) can help you categorize your spending and highlight areas where you can cut back.

Once you know where your money is going, look for ways to trim the fat. Perhaps cutting back on dining out or finding a cheaper phone plan could free up an extra $100–$200 a month. It might not sound like much at first, but small changes add up over time.

The key is consistency — the more disciplined you are about sticking to a budget, the more you can redirect those savings into a retirement account.

Max Out Employer Contributions…Free Money Is Free Money

If you have a job that offers a 401(k) plan or some sort of workplace pension (like in the U.K.), take full advantage of it. This is free money on the table, and not contributing is essentially leaving cash behind. 

Many employers will match your contributions up to a certain percentage, which means you’re doubling your retirement savings without lifting a finger.

For example, if your company matches 4% of your salary, you should be contributing at least 4%. If you can swing it, try to go higher — because that match is the easiest way to grow your retirement fund.

Even if you’re a gig worker without employer-sponsored retirement options, there are still alternatives like IRAs (Individual Retirement Accounts) in the U.S., or private pensions in the U.K., which allow you to set up your own long-term investment plan.

Start Investing Early To Understand The Magic of Compound Interest

The earlier you start investing, the better — and early doesn’t have to mean your 20s. Don’t give up just because you feel like you’re starting from behind. Today is early compared to tomorrow. 

You don’t need to be an expert to begin; the important thing is to get your money working for you. Compound interest is a beautiful thing — it’s the process where your money earns interest, and then that interest starts earning interest itself. Over time, it grows exponentially.

Start with low-fee index funds or ETFs (Exchange-Traded Funds), which give you exposure to a broad range of companies, and they tend to be less risky than individual stock picking. 

You don’t need to time the market; regular, consistent investments over time will help you build wealth without the stress.

Even if you can only put away a small amount each month, it’s important to get in the habit of investing as early as possible. Over time, those contributions will grow, and by the time you’re ready to retire, they’ll have multiplied.

Consider Alternative Investments

If traditional retirement plans aren’t quite cutting it, look into other ways to build wealth. 

Real estate, for example, can be an excellent long-term investment. You don’t need to buy a mansion; even small rental properties or REITs (Real Estate Investment Trusts) can be a way to create passive income that supports your future.

In addition, if you have any specialized skills, consider using them to build a side business that could eventually grow into a source of income during retirement. The more diverse your income streams, the better.

Be Smart About Your Debt

While you might not be able to erase your student loans overnight, you can be strategic about paying them down. Consider paying off high-interest loans first (like credit card debt) before tackling lower-interest ones like student loans or mortgages. Refinancing options can also help reduce the interest rates on certain loans, saving you money over time.

Once your debt is under control, you’ll be in a better position to focus on saving for the future.

You Can Still Retire — But You Need a Plan

While it may feel like millennials are up against a lot of financial challenges, the truth is that you can still retire if you start planning early, prioritize saving, and get creative with your finances. 

Retirement may not look exactly the way your parents imagined it, but with the right mindset and some smart money moves, it can still be a reality. 

The key is to start now, be disciplined, and remember that every dollar you save today is one step closer to your future self being able to rest easy.