#Nextchat: Roth IRA and Millennials


In a recent Forbes article, Erik Carter, a certified financial planner with Financial Finesse, states: “[Millennials] are the generation that are the least likely to be on track for retirement.” Although three-fifths of young people consider themselves to be “savers,” 45 percent are not saving for retirement. This is caused by a combination of elements: Young people often have large amounts of debt, they witnessed two economic downturns, and many Millennials believe that planning for the future can wait until the future.

According to recent findings, Americans owe more than $1.2 trillion in student loans, and 39 percent of young people feel overwhelmed by their current amount of debt. This situation does not encourage investing or saving for retirement but instead causes Millennials to spend for “now” instead of saving for their future. Fifty-six percent of Millennials say they are living paycheck-to-paycheck and cannot afford to start saving for retirement. This causes a lack of confidence in their personal finances and a disregard for saving for retirement at this crucial time in their lives.

In a Bloomberg article, Neil Howard, founding partner of LifeCourse Associates, says, “[Millennials] look at the stock market and see nothing but danger.” The two economic downturns caused a distrust in the stock market for Millennials.  A significant amount of young people choose to save cash instead of investing in stock. Young people are not taking the opportunity to invest in stocks that will help them over time because they see it as too risky or do not understand the benefits. As an example: affluent Millennials hold 52 percent of their money in cash and 28 percent in stocks, while people from older generations have 23 percent in cash and 46 percent in stocks.   

As a group, Millennials have an expectation of immediacy, where any wait is too long. In a culture where almost anything can be bought online with one click, the idea of saving up for the future is often the last thing on any young person’s mind. Retirement seems so far away to young people that they do not make it a priority. Millennials often put off saving because of a lack of understanding of how to save and invest for retirement and have many questions regarding this program. Would you suggest a Roth IRA for a Millennial? How would you encourage young professionals to get their feet wet in the stock market?

Please join @weknownext at 3 p.m. ET on July 30 for #Nextchat with special guest SHRM Manager of Compensation and Benefits Bruce Elliot (@bhelliott04). We'll chat about the Roth IRA and other wise investment choices for young professionals. 


Q1. Employers, how are you encouraging young professionals to begin saving for retirement?

Q2. What are the advantages and disadvantages of contributing to a Roth IRA?

Q3. How does a Roth IRA compare to other retirement investment plans in the workplace or to traditional IRAs?

Q4. As a young professional/Millennial, how are you currently investing?

Q5. As a young professional/Millennial what aspects of investing and your future financial security are you most concerned about? 

Q6. What advice would you give young professionals regarding how to invest and save for retirement?

Q7. In addition to their 401(k)s, what is one other investment that you recommend for financially wary young professionals?

Q8. What resources would you recommend to young professionals to help them learn more about investing?

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