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Young Americans Desire Early Retirement, But Haven't Started Saving

A substantial fraction of Americans want to retire early, but many of them hav

A substantial fraction of Americans want to retire early, but many of them have not yet begun to put money away for this event, according to a survey and resulting report released by the BMO Retirement Institute.

The report, titled Broadening the Approach to Preparing for Retirement, indicated that 35 percent of participants in a finance survey expect to retire before reaching the age of 60. However, 24 percent have not saved any funds for retirement.

A strong majority, or 84 percent of adults between the ages of 18 and 34, have stated that retirement planning is an important concern. Less-than half, or 45 percent, currently have money saved in a traditional IRA or a Roth IRA. Less-than one-quarter, or 21 percent, have devoted time to contemplating the amount they will need to save for retirement.

"There is an obvious dichotomy between what young people think about retirement and what they're actually doing to prepare for it," Tina Di Vito, head of the BMO Retirement Institute, said in the statement. "While it's encouraging that young adults appreciate the importance of retirement planning, there's clearly a disconnect between the concept and then putting the tangible pieces in place."

She specifically indicated that these key pieces were determining how much will be needed to retire and starting to put money sway. She stated that a lack of these goals is particularly concerning given the amount of participants in the survey that expect they will retire before 60. 

Impact of attitudes and behaviors

The report discovered that attitudes and behaviors can be utilized to predict how financially prepared people will be when they want to retire. One good way to educate young people is to teach them simple skills such as budgeting, which can help provide them with strong financial habits and motivate them to gather the information they need about proper habits related to saving for retirement.

"Having a general appreciation of how much money you'll need in retirement involves the important first step of visualizing what you want your retirement to look like," Di Vito said.  "Only then can you develop an effective savings plan.  This process takes time, research and self-reflection, and the attitude you have entering into it will largely determine your success."

The expectations that many of these young adults have contrast with the beliefs of many other Americans. In a recent Wells Fargo finance survey, 25 percent of people making between $25,000 and $99,999 per year indicated they do not expect to retire any earlier than 80. 

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