A recent poll from CNBC and Generation Lab found that millennials aren’t investing as much as they should.
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Nearly two-thirds (63%) of young adults say the stock market is the best place to invest and build wealth, but 61% say they don’t have enough money saved each month for retirement. Additionally, nearly half (48%) say they don’t have enough saved to cover more than two months of living expenses. The survey polled 1,013 U.S. adults ages 18-34 in late January.
Clifford Cornell, a certified financial planner and associate financial advisor at Born Fide Wealth in New York, told CNBC that millennials generally don’t have much cash saved up.
“This really illustrates why so many people don’t save for retirement and why they want to invest but can’t do it now,” he said. “We know we need to have a cash reserve. We know we need to have a few months’ worth of expenses set aside before we even consider investing in a retirement account.”
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Younger Millennials and older Zoomers are falling behind in retirement savings
So how much should millennials invest in the stock market to retire comfortably?
The exact amount depends on your current income and the lifestyle you want after retirement. According to Northwestern Mutual’s 2024 Planning and Progress Study, millennials have an average of $62,600 saved for retirement (Motley Fool). By saving regularly and diversifying your investments, Motley Fool says you can build up enough money to live a comfortable life in retirement.
To get a more accurate figure, SmartAsset suggested that, assuming the average age of a hypothetical millennial is 32, the goal might be to invest $10,000 a year in the stock market (or more than $150,000, assuming this millennial started working at age 16).
But a new report from the Federal Reserve Bank of New York, reported by Business Insider, suggests that millennials who do invest are actually pretty good at it.
Americans between the ages of 18 and 40, mostly millennials, saw their wealth increase by 80% from early 2019 to late 2023 due to rising values of financial assets and stock market portfolios. According to the Federal Reserve Bank of New York, the S&P 500 rose by 90% from 2019 to 2023. Business Insider noted that younger investors are more likely to invest in stocks and riskier assets than older adults, who are closer to retirement and tend to put their money in safer places like bonds.
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This article originally appeared on GOBankingRates.com: Millennials Should Have Invested Over $150,000 in the Stock Market by Now
