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5 Mistakes Millennials are Making with their Retirement Accounts Thumbnail

5 Mistakes Millennials are Making with their Retirement Accounts

Michael Baum, CFP® RICP®
Vice President & Associate Financial Advisor 

The word “Millennial” has been more descriptive of a culture rather than a well-defined group, but the Pew Research Center pegs it as anyone born between 1981 and 1996.1

By that measure, in 2022, the eldest Millennials are 41 years old. They grew up during the dot-com boom where it seemed that technology drove the economy to new heights and likely heard how important it is to invest to get wealthy. They also lived through the financial crisis and may have had a hard time finding work after incurring huge amounts of student debt. 

These experiences may have colored their view of the economy and how best to negotiate it. And perhaps that’s why there are certain investment behaviors that, while not unique to Millennials, seem to be more prevalent among them – and unfortunately, most of those behaviors can do more harm than good.

Here are five of those mistakes to avoid when it comes to investing and saving for retirement, whether you’re a Millennial, Gen Z, or even part of the Gen X or Boomer generations.

Mistake 1:  You’re Cash Heavy

The biggest mistake may be not having a retirement account at all. A study from Bankrate, a financial services company, finds that many Millennials are heavily invested in cash. That means they have lots of money in savings accounts and CDs, not so much in investments.2 The strategy is understandable given how the markets rocked the economy in 2007. Yet, having a more diverse portfolio that earns more interest than a savings account may be best, and in fact history has proven it.

Mistake 2:  You Have a Fear of the Markets

The fear of stock market volatility may be a rational fear. However, it may be counterproductive; erring on the side of stability and it may prevent Millennials from creating a robust retirement fund. While a short-term hiccup can cause havoc with an investment portfolio, stocks can produce a good return over the long-term if the investor has a goal in mind and a plan to reach that goal.

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Mistake 3:  You Make Investments Blindly 

Other research from financial services companies shows that Millennials are less likely to review investment portfolios or their 401(k) after they’ve initiated them. They don’t look to review and readjust portfolios for market changes. Because they’re relatively young, Millennials have the time to do more with their money. They can take more risks, which could mean market investments instead of cash. They can reallocate funds annually or when they start to earn more money. A diverse portfolio can help mitigate risk so that one wrong move won’t ruin plans. The relative youth of Millennials also gives them time to make a plan and invest towards a goal, whether it’s college or retirement. A plan is something that someone who does blind investment hasn’t created.

Mistake 4: You’re Not Taking Full Advantage of Your Benefits

If you’re not part of the freelance economy as many Millennials are, you likely have an employer who will contribute to your 401(k), matching your contribution up to a preset maximum. Some employers will match your entire contribution or just a percentage of it. However, some Millennials aren’t taking full advantage of the employer’s matching contribution. If the employer matches your contribution to your retirement account at 100% and you aren’t contributing as much as possible, you could be missing out on thousands of dollars over time.

Mistake 5: You’re Not Strategizing with a Financial Advisor

Over a short period of time, the Millennial generation has seen great turmoil in the economy and in the world. They have seen more changes than their boomer predecessors have, and they continue to experience some uncertainty. Having a sound financial plan for retirement may help ease some concerns. Whether you’re starting out in the job market or have a strong career going full steam, it helps to discuss investment strategies and retirement plans with a financial advisor.

Don’t have a strategy in place yet? We can help you build and manage one so that you can always be sure you’re maximizing your finances to their greatest potential.

Get in touch and see how our Plan Well, Invest Well, Live Well™ process can help.


Presented by Vice President, Associate Financial Advisor, Michael Baum, CFP® RICP®. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your financial advisor. Weiss, Hale & Zahansky Strategic Wealth Advisors does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice. 697 Pomfret Street, Pomfret Center, CT 06259, 860.928.2341. http://www.whzwealth.com 

1.  http://www.pewresearch.org/fact-tank/2018/03/01/defining-generations-where-millennials-end-and-post-millennials-begin/

2.  https://www.bankrate.com/investing/financial-security-july-2018/

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