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Millennials! Are you saving and investing in the FTSE 100 for retirement?

If you were born between 1980 and 1996 (i.e., ages 23 to 39 in 2019), you are likely to be part of the generational cohort knows as ‘Millennials’, also referred to as Gen Y. You are a diverse group of consumers, workers, savers. You come after Gen X and before Gen Z.

Different generations of Britons usually have different approaches to spending, saving, and investing. Yet generating the best investment returns isn’t necessarily based on demographic factors or on who may be the smartest. I hope you will read this article with the light of opportunity and hope when it comes to saving for retirement and long-term investing. 

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Death of retirement?

Mega events are likely to shape each generation, especially when they were young adults. Millennials were affected by the 2008–09 recession, which caused record levels of unemployment and unprecedented economic instability. Understandably, as young adults at the time, this group has first-hand knowledge of the gig economy, student debt, and out-of-reach house prices, as well as stagnant wage growth. 

When trying to balance various life priorities, such as securing your first mortgage, getting your career on the right path, or starting a family, saving for retirement may easily get pushed to the back burner. Yet, believe me when I say Future You will thank you for starting your ‘investing for retirement’ journey, today

The full basic state pension is currently £168.60 per week. Do you truly believe you can live on that amount for the rest of your life after retirement? What makes it even more complicated is that by 2028 the age at which one could claim state pension is set to increase to 67. Thus when it comes retirement readiness, the ‘responsibility’ has been shifting from the government to individuals.

Ensuring a financially secure retirement

It is important to form a realistic view of how you can pay for retirement in several decades. For example, I’d encourage you to contribute to your workplace pension scheme if you have one.

Every UK resident should also learn more about the different types of ISAs available to them, with an emphasis on Stocks and Shares ISAs. You may also benefit from discussing your own financial realities and expectations with a financial planner.

My Motley Fool colleagues regularly cover FTSE 100 and FTSE 250 shares as well as funds to consider adding to a diversified retirement portfolio. They point out that the stock market returns about 7% to 9% annually on average. 

Time is on your side

As you ease into your 30s, it may be time to adopt a slightly more serious view of financial planning and retirement. Let us assume that you’re now 35 years old with only £15,000 in savings and that you plan to retire at age 65.

You decide to invest that £10,000 in a fund now and make an additional £3,000 of contributions annually at the start of the year. You have 30 years to invest. The annual return is 8%, compounded once a year. At the end of 30 years, the total amount saved becomes £517,977.

Saving £3,000 a year would mean being able to put aside £250 a month or about £8–£9 a day. Might you just be wondering if you should skip that next impulse purchase?

If I were a millennial, I’d surely choose saving and investing for a secure retirement over a picture perfect lifestyle now.

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The views expressed in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.