Smart Millennial Retirement Planning

Millennial Retirement Plans (Hashtag!)

Last week, the trending hashtag #MillennialRetirementPlans shone a darkly funny light on the despair many millennials feel regarding their financial futures. This generation (born from around 1981 to 1996 depending on the definition) has faced its share of economic challenges. The 2008 crash hit many millennials with the triple whammy of skyrocketed healthcare, student loan debt, and a dearth of paying jobs and wage stagnation. Their average net worth is less than their predecessors’, at less than $8,000, according to a study by Deloitte. They have witnessed wild volatility in the stock market–with swings of a hundred points in a day or thousands in a week—whereas the Baby Boomer generation saw the consistent climbs of the 80’s and 90’s. Research indicates that financial fears are causing this group to defer home ownership and families.

Despite the challenges, millennials are approaching financial planning with their eyes more open than their parents’ and grandparents’ generations. A study by TransAmerica found that found millennials start saving for retirement at age 24, compared to 30 for Gen X and 35 for Baby Boomers.

Business Ownership and Financial Planning

One smart way of preparing for your financial future is business ownership. As we’ve written before, entrepreneurship through acquisition allows you to mitigate the risks involved with starting a business from scratch while maximizing the personal rewards of owning a business.

“[Your] significant ownership interest adds both to rewards and stability. In the long run, we think that being a senior consultant involves much more angst than being the CEO of a small business,” write Harvard Business School professors Richard Ruback and Royce Yudkoff.

An additional benefit of business ownership is in-built, savvy financial planning. You can leverage up to 100% of your 401(k), 403(b)s, IRA, or any other retirement fund to purchase a business. IRS code allows, when structured properly, that such a roll out does not incur penalties for early withdrawal. This frees up funding without creating interest payments on loans, allowing you to launch into your business unencumbered by debt—or at least much less burdened. If you use financing from an Small Business Administration loan, which most purchases do, the terms are almost always better than banks’.

“Instead of investing your money in mutual funds or stocks over which you have no management control, you can invest your savings in your business and grow your equity,” says SGA President Michael Greene. “Your business becomes your retirement fund. With good management and a strong growth record, you can usually sell it for more than you paid for it when you’re ready.”

Opportunities

Click here to see the business listings currently on the market to launch you on the path to a rewarding, independent future.

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