A lot can happen over 40 years. You are likely to change jobs upward of 10 times, according to U.S. Bureau of Labor Statistics averages. Odds are good you will get married and have kids. You might buy a house or get a dog. You will eat more than 4,000 pounds of potatoes, assuming consumption averages from the National Potato Council stay steady.
What you likely won’t do is die, at least statistically speaking. A woman who turns 30 this year is expected to live another 55 years, according to Social Security’s estimates. A man will live another 51.
And yet according to new research from PGIM Investments, more than a third of millennials said they “don’t see the point of planning for retirement because anything can happen between now and then.”
There’s a lot of irony in that perspective, because the fact that anything can happen is precisely why you should save.
Save for freedom, not retirement
It might be difficult to imagine any of the above events happening, let alone retirement on a white sandy beach. And if you can’t imagine the future, it’s hard to save for it.
So don’t, said Sophia Bera, a certified financial planner in Austin, Texas. “The reality is we really don’t know what retirement looks like for millennials, so what I talk more about is setting yourself up for options and flexibility.”
Having money saved and invested gives you financial security. That security may allow you to retire one day, yes — but it could also allow you to take a job that pays 25 percent less but makes you 100 percent happier, or to take time away from work altogether to travel or have kids.
“If you save $1 now, you are basically giving a gift to your future self. You can do anything you want with it,” said Brian McCann, a certified financial planner in San Jose, Calif.
Save for the hard times, too
Building your savings also puts you in a better position to weather the unexpected.
And while you are much more likely to reach retirement age than die early, your chances of encountering a financial blow at some point in your working life are pretty good.
Layoffs are more rare right now, but unemployment will almost certainly rise again before millennials retire. Likewise, more than 1 in 4 of today’s 20-year-olds will experience a disability that takes them out of the workforce for at least a year before retirement age, according to the Council for Disability Awareness.
Even if you are not one of them, there is a good chance you will spend some time in the future caring for someone else, such as an elderly parent.
All of that makes the case for saving more when you can, because there are likely to be times in the future when you are forced to dial back your savings rate or pause saving completely.
“There are certain things we just can’t anticipate,” Bera said. “If you contribute more to retirement accounts when you are young, compound interest works on your side.”
Thanks to stock market returns, money you have been able to invest can continue to grow despite no additional contributions.
It can also serve as a critical lifeline if needed — retirement accounts are notoriously strict about early distributions, but one variation, the Roth IRA, allows owners to pull out contributions at any time.
Balance today and tomorrow
If saving for the future didn’t require sacrifices today, we would all do it. But that trade-off is what holds many people back: If you don’t know what’s coming, why not live in the moment and worry about tomorrow, tomorrow?
If you have ever waked up to a sink full of dirty dishes, you know the answer to that question — when tomorrow comes, you almost always curse lazy, last-night you. The trick to avoiding the retirement version of that scenario is to make today’s sacrifices less painful.
Start by putting a number on how much you should be saving each month, even if you can’t get to that goal right away. (A retirement calculator can help here.) Then put real thought into your values, McCann said, to find the money to reach that retirement goal and enjoy life in the present.
“What I like to have people do is spend freely on the things that are important — the things that give them satisfaction and joy. Then be ruthless with everything else,” McCann explained.
That could mean budgeting in travel if it’s important to you, but forgoing things like cable or eating out so those travel expenses don’t cut into your ability to save. Or maybe it’s writing your own version of the American dream.
Arielle O’Shea is a writer at NerdWallet. E-mail: firstname.lastname@example.org. Twitter: @arioshea.