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How Retirement Planning Varies by Generation

By U.S. News & World Report

Retirement planning for today’s twenty-somethings is not the same as it was for their parents or grandparents. Fifty years ago, it wasn’t unusual for long-term employees to have a pension that guaranteed a certain amount of income in retirement. But today, this is no longer the case. And this change in workplace retirement benefits makes a big difference in how each generation looks at retirement planning.

A 2016 Franklin Templeton Investments survey of 2,019 adults found that the majority of those who are within a few years of retirement are feeling anxious about their ability to meet retirement expenses. Much younger millennials also share these concerns. But in spite of this, more than half (57 percent) of millennials say they haven’t even started saving for retirement yet.

Baby boomers, gen Xers and millennials are each facing unique financial concerns, but also have a few financial anxieties in common. Here’s a look at how generational differences impact retirement planning, and what you can do to improve your financial situation at each stage of life.

[See: 10 Ways to Get Ready for Retirement After Age 50.]

Baby boomers. One major issue for baby boomers is lifespan. They’re living longer than their parents or grandparents did, so they need to save up for more years of retirement. Many baby boomers are enjoying more vibrant health than older generations, but that doesn’t mean they won’t face medical bills down the road.

The Franklin Templeton survey found that 30 percent of baby boomers who are retired started retirement earlier than planned due to unforeseen circumstances. Many baby boomers (70 percent) expect to rely on Social Security throughout retirement, and 29 percent expect medical costs to be their top retirement concern.

Boomers who are ready to retire but don’t have quite enough money to pay for their desired lifestyle might be able to improve their situation by working part-time in retirement. Part-time work can allow you to reduce your withdrawals from retirement accounts and give your investments more time to grow. Pay close attention to how continued earnings interact with your Social Security payments to make sure that part-time work won’t temporarily reduce your Social Security benefit. A part-time job can help you to enjoy many of the perks of retirement, such as increased leisure time, while reducing the threat of running out of money too soon.

[See: 10 Costs You Can Eliminate in Retirement.]

Gen Xers. Now starting to turn 50, Gen Xers are the current sandwich generation. Many are still parenting kids or starting to send them to college, while also taking care of aging parents. This means that many Gen Xers aren’t where they need to be with retirement savings, and it’s time to buckle down.

A Transamerica Center for Retirement Studies survey of 4,550 workers found that 45 percent of gen X workers are putting off thinking about retirement until they get closer to their retirement date. However, this delay in planning could hurt them later if they also put off saving and investing for the future to focus on current needs. This generation is likely to be highly reliant on 401(k)s and many are behind on savings, but they still have a little bit of time to catch up.

Millennials. The spending and savings habits of millennials differ from those of older generations. Millennials dine out more often and purchase more retail goods than gen Xers and baby boomers, but they’re frugal with their money and spend less overall than the older cohorts, who make less frequent larger purchases, according to a TD Bank poll of more than 1,500 consumers.

Nearly a third of millennials (32 percent) are worried about running out of money in retirement, and 69 percent expect to rely on their 401(k)s for income in retirement, the Franklin Templeton survey found. A comfortable retirement with a 401(k) plan requires diligent saving habits. Millennials who are currently saving for retirement in a 401(k) should increase their contributions as their income grows. Those who haven’t started saving yet should consider cutting back on some of that discretionary spending in favor of building wealth for the future. Those who don’t have access to a 401(k) at work could get tax perks by contributing to a Roth IRA or myRA.

[See: 10 Retirement Planning Moves to Make in Your 20s.]

What individuals want from retirement is likely to vary by generation. But, for every generation, saving for retirement gives you options that those without money in the bank don’t have.

More from U.S. News

10 Alternatives to Full-Time Retirement

How Your 401(k) Balance Stacks Up

Retirement Planning Decisions You Might Later Regret

How Retirement Planning Varies by Generation originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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