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Lesko Financial: Why Millennials Need to Save for Retirement

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BINGHAMTON, N.Y. -

Jonathan: Do millennials need to save for retirement? One online discussion focused on that very question and got some surprising comments.
Greg Lesko of Lesko Financial explains.

Greg: In your 20’s, retirement seems an eternity away. Yet savvy millennials understand that starting to save early is a good way to build wealth.
The question is: What portion of their income should they put aside for retirement? One 25-year old with a new baby, a healthy five-figure salary and a workplace-sponsored retirement plan, crunched some numbers and decided he didn’t need to save more than 12% of his wages to have a great retirement.
His online community, however, became very vocal and called him “short sighted.”   

Jonathan: What was wrong with his plan?   

Greg: Many commentors said the biggest flaw was his failure to account for life’s uncertainties. They cited possible job loss, divorce and illness-- all-too-common financial realities that would easily derail his rosey projections. Many had stories of their own, including careers halted by layoffs, unexpected medical problems or special needs children. Others said the investing returns he predicted were a “best-case” scenario that could fall apart during stock market declines. These comments are an encouraging sign that many millennials have gotten the message about saving.
 
Jonathan: How much should someone save for retirement?   

Greg: The rule of thumb is about 15% of your income consistently over time. But the big lesson here is that financial realities you don’t see coming are what you really need to plan for. This means maxing out your savings and investments and creating a healthy financial cushion to protect against an uncertain future.