Here’s Why Tony Robbins Tells Millennials to Buy a House, Not a Home

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For generations past, home ownership was a significant rite of passage that signaled stability, commitment, and, often, prosperity.

But, in this as in so many other cases, millennials are different.

As of 2015, adults under age 35 made up 19 percent of U.S. households but less than 10 percent of homeowners, according to a report released by Harvard University’s Joint Center for Housing Studies. In fact, in 2015 home ownership for that group fell to a historic low of 31 percent.

Entrepreneur and bestselling author Tony Robbins says that, while millennials might be missing out on the social upsides of home ownership, real estate is not the best investment they could be making


“One of the weakest performers [is] your own personal real estate, because it doesn’t provide much income,” Robbins says. “It’s an inflation hedge. You do a little better than inflation, and you can have your own home, so there’s a psychological, emotional benefit.”

Instead, millennials in a position to buy property should be considering how to do so in a way that will provide them additional cash flow, he says.

“If you can own real estate, real estate with an income is the one [form of] real estate that’s more valuable,” says Robbins.


Opinions on the imperative of millennial home ownership vary.

Self-made millionaire Grant Cardone tells CNBC that home owners are forced to continue to spend unceasingly, and that he regrets buying a house at age 30.

“Unless you have 20 million bucks in the bank, in cash, you have no business buying a house,” says Cardone.

In personal finance classic “Rich Dad Poor Dad,” author Robert Kiyosaki notes that houses should be viewed as a liability, as opposed to an asset, and points out that it’s not a given that a home will appreciate in value.

“I am not saying don’t buy a house. What I am saying is that you should understand the difference between an asset and a liability,” Kiyosaki writes. “When I want a bigger house, I first buy assets that will generate the cash flow to pay for the house.”

Robbins emphasizes that real estate investing doesn’t need to entail keys and a welcome mat.

“You can [invest] through a REIT. You don’t have to buy everything, you get a piece of all these things,” Robbins says.

But whether millennials choose to spend their nest egg on a nest, or begin focusing on a portfolio instead, Robbins says the worst mistake is making no investment at all: “The most important thing, I think, for millennials, is to get in the game.”



Written By: Kathryn Dill
Source: CNBC


Companies Can’t Figure Out How to Please Millennials

Cheerful young couple walking in countryside holding hands
mediaphotos/Getty Images

(Bloomberg) — Companies bending over backward to sell to millennials are doing the one thing the cohort hates most: trying too hard.

Attempts at wooing the emoji generation are often rewarded with a deafening ho-hum. Tic Tac put out a candy that changed flavors while dissolving (because millennials presumably get bored quickly); sales rose, but less than in the prior two years. Diet Coke put fan tweets on billboards (because Twitter is the millennial’s native tongue, the thinking goes); Americans still drink less and less soda. Banana Republic partnered with Hot Dudes Reading, an Instagram account, to create #HotDudesReadingForACause (because millennials reportedly want products with social conscience); net sales dropped 10 percent.

“It’s as if your parents are trying to connect with you and they’re trying to do it by using the same language that your friends would,” said Paul Angone, 32, author of two books on millennials, including “All Groan Up: Searching For Self, Faith, and a Freaking Job!” Talking in emojis, for instance, “comes off as pandering and inauthentic.” With this crew, the biggest mistake is seeming inauthentic, he said.

Working Adults

It’s hard to blame companies for trying. The 83 million American millennials have become the country’s biggest percentage of working adults, making them prime targets for consumer brands. And it’s not that the generation born between 1980 and 2000 doesn’t want to buy stuff. It’s that, mostly, they can’t. Seventy percent of the Class of 2014 took out loans to pay for college and owe an average of $29,000, according to the Institute for College Access & Success. In 1993, graduates owed an average of less than $10,000.

“Over the next five to 10 years, they’re going to drive a disproportionate share of spending, so their preferences matter,” said Paula Campbell Roberts, a consumer economist at Morgan Stanley. “But sluggish wage growth, student debt and high rental costs have constrained their actual growth rate. The share of consumption driven by college-age consumers overall has been in decline since 2003.”

Consumer Spending

U.S. consumer spending in 2014 grew 3 percent for 25- to 34-year-olds, compared with 5 percent for the rest of the population, according to Morgan Stanley data.

Paying off debt looks increasingly daunting. Stagnant wage growth disproportionately hits this group, which mostly doesn’t have other sources of wealth, Roberts said. And the money millennials make is largely spent on housing. In 2013, more than half of renters spent more than a third of their income on rent, compared with 30 percent of renters paying one-third in 2005.

Kent Paris, a 24-year-old graduate student at University of California-Riverside, says he sometimes skips meals so he can make ends meet — and he lives with his parents. That’s because he’s repaying $20,000 in loans for a one-year graduate program in education.

“I have to monitor priorities-wise — I have to be able to drive to school, I have to be able to buy my school supplies,” he said.

Online Reviews

Consequently, many millennials are discerning about what they buy. They read as many as 10 online reviews before making a purchase, said Nora Ganim Barnes, professor of marketing and director of the Center for Marketing Research at the University of Massachusetts-Dartmouth.

So the parade of targeted marketing marches on despite the chance of rain. This summer, PepsiCo Inc. will release cans decorated with emojis, another language supposedly native to millennials; Anheuser-Busch InBev SA bought seven craft breweries in two years, a play for perceived authenticity; Chuck E. Cheese introduced Wi-Fi, an appeal to young, gadget-glued parents; McDonald’s Corp. did a promotion where customers could pay with love, which might be the right price for cash-strapped millennials; Kellogg Co. is re-purposing breakfast cereal as a snack food, presumably because wacky millennials eat it at night; and the company that makes Absolut Vodka boosted its focus on social responsibility because that’s what conventional wisdom says wins the hearts and wallets of millennials.

It remains to be seen if these and other established companies can succeed where others didn’t.

“They’re sort of doing stuff at the edges to try and look like they’re the kind of brand that millennials might like, but really at the core they’re not making the changes they need to make to really appeal,” said Brent Smart, chief executive officer of marketing firm Saatchi & Saatchi New York. “All these brands are like, ‘We really need millennials!’ It’s like, OK, what are you going to do differently?”

–With assistance from Craig Giammona To contact the reporter on this story: Jennifer Kaplan in New York at To contact the editors responsible for this story: Nick Turner at, Bob Ivry

©2016 Bloomberg L.P.

Written by Jennifer Kaplan of Bloomberg

(Source: Bloomberg)

My 401(k) is Tanking. What Do I Do?

Provided by Fidelity

The markets have taken some pretty wild swings lately. But is now the right time to revisit your 401(k) investments? I’ll tell you in this week’s Money Minute:

There’s nothing wrong wanting to check things out. If you’re nervous about your investments, ask your plan administrator to take a look under the hood. Jeanne Thompson, VP of investments for Fidelity, says 401(k) investors should work with a financial advisor at least once a year to rebalance their holdings anyway. “There are advantages to making changes both when the market is high or low,” Thompson says. “A lot of times people pick the beginning of the year to call [and rebalance] but there isn’t one particular time of year that’s best.”  The point of rebalancing is to make sure you’re taking on the right amount of risk given your age and retirement goals. Just don’t forget about your emotional tolerance as well. If you’re waking up in a cold sweat in the middle of the night every time the markets get shaky, maybe it’s not wise to put 90% of your 401(k) in stock funds.“You want to be able to sleep at night,” says Thompson.

Younger workers probably have less to worry about. If you’re decades away from retirement, don’t be surprised if your advisor tells you to hang tight. Younger workers are advised to take on more risk early because they have a longer time to recover from any market setbacks—and more time to reap the rewards when markets bounce back. Given the way most young workers are investing these days, they may have even less to worry about. According to Fidelity, nearly two-thirds of millennial 401(k) investors are 100% invested in target-date funds, a type of fund that picks your holdings based on your age. Target-date funds are meant to be left alone. They automatically shift away from stock-heavy investments to the safety of bonds as you age.

Just remember — you’re probably better in the market than out of it. Sometimes the best time to get in the market is when things are looking bleak — read: cheap. Just ask the folks who pulled their money out of the market back in 2008. Fidelity, one of the largest investment firms in the U.S., found that people who stayed in the market saw their accounts grow by 88% five years after the recession. People who turned to cash saw their balances grow by just 15%.

What’s important is that—even when you’re watching the value of your holdings fluctuate—you keep contributing to your account. Retirement plans are meant to be long-term investment vehicles, and making moves based on short-term volatility has proven a bad idea many times over.

The bottom line: You can’t time the market. What you can do is work with a financial advisor to come up with a retirement plan you don’t have to worry about every time the market gets shaky.

Written by Mandi Woodruff of Yahoo! Finance

(Source: Yahoo! Finance)

Millennials are Starting to Change the Stock Market

Alistair Owen pours most of his paycheck into what he calls a travel-and-lifestyle fund.

“I’m not saving up to buy anything,” said the 28-year-old engineer, who shares a rented apartment with two flatmates in south London. “I prefer to go out for dinner at a nice place, pay a round at the pub or explore a new area of the world. I feel like I would be losing out on living if I chose to own stuff instead.”

The stock market is starting to reflect his priorities and those of his generation — the millennials, those born between 1980 and 2000. Leisure and travel-related stocks, including pubs, airlines and pizza restaurants, have trumped retailers since consumer confidence picked up following the financial crisis. For U.S. and European indexes tracking the industries, the outperformance just reached the highest since at least 2011.

US Leisure
Provided by Bloomberg

“Experiences help millennials shape their identity and create memories, to a greater degree than for older generations,” said Sarbjit Nahal, head of thematic investing at Bank of America Corp. in London. “You’ll want to look at companies focused on live sporting events, festivals, online gaming, the sharing economy, travel and even music streaming — all of these are experiences that millennials can share with their friends.”

What little evidence — it’s largely anecdotal — there is, it tends to back up the arm-chair psychology. A survey by market-research firm Harris Poll and Eventbrite Inc., an online marketplace for ticket sales, showed 78 percent of millennials would rather pay for an experience than material goods. That compares with 59 percent for baby boomers. Some 82 percent of millennials said they went to a live event in the past year — concerts and festivals — and 72 percent said they plan to increase spending on such outings.

Andrew Oswald, an economics professor at Britain’s University of Warwick in Coventry, says today’s young consumers feel like they own enough already. With their material desires almost completely exhausted, millennials need alternative roads to satisfaction, he says, referring to research by Thomas Gilovich, a psychology professor at Cornell University.

“It’s now experiences that people are short on, not items,” says Oswald, whose research focuses on what he calls the economics of happiness.

Underscoring his point, merchants aren’t reaping the benefits of all the extra cash that consumers were meant to funnel their way from lower fuel costs. The latest retail sales data missed projections in the U.K., U.S., and in the euro area.U.S. chains ranging from Macy’s Inc. to Best Buy Co. reported slowing holiday sales.

Provided by Bloomberg

In contrast, sales at companies like pub operator Greene King Plc have been strong. Low-cost airlines Ryanair Holdings Plc and EasyJet Plc have soared almost sevenfold since their crisis-era lows. Ski operator Vail Resorts Inc. is up more than 700 percent since the U.S. market bottomed in 2009. Airbnb Inc.’s $25.5 billion valuation is more than Macy’s and Best Buy’s combined. Investors will be soon be able to buy an exchange-traded fund focused on millennials, which will include companies involved in social media, e-commerce, mobile technology, healthy lifestyles, travel, leisure and the sharing economy, according to its Dec. 11 prospectus.

A sacrifice for all this fun: savings. With incomes shrinking, only 34 percent of millennials worldwide said they saved enough money each month, according to Nielsen’s 2015 Global Generational Lifestyles survey. They’re also not that interested in allocating funds to acquire the totems of their parents. Buying a car was a top priority for only 15 percent of millennials in a Goldman Sachs Group Inc. survey cited in a 2015 report. The number was the same for purchasing a television, and just 10 percent for a luxury bag.

Even with some cash from selling the flat she’d bought with her now ex-husband, the last thing on Selina Mathews’s mind was getting back on the property ladder. The 30-year-old shares a London apartment with two friends and regularly dines out — Nielsen’s data show six-in-10 millennials go out to eat at least once a week, twice the percentage of baby boomers.

“I don’t put much of my monthly salary aside at all,” said Mathews, who works on the trading floor at an American investment bank. It’s bonus time, and she’s planning trips to the Philippines and Japan. “I’d rather rent a really nice room, explore the world, have some fun with my friends and enjoy my life rather than own a bunch of things. There’s an element of freedom in that.”

Jack Huang, a Californian in London, is building his business on that outlook. The 35-year-old founded the website Truly Experiences in 2012, when he couldn’t find a suitable wedding gift for a food-loving business school friend. The company sells everything from $71 whisky tastings to a half- million-dollartrip to the edge of the Earth’s atmosphere.

“People want to buy happiness,” Huang said at a London cafe in January. “An experience is unique because it gives them that in three stages: the anticipation, the event itself, and the memories after. Not only does that final stage last forever, but you can also share it.”

Written by Sofia Horta e Costa of Bloomberg

(Source: Bloomberg)

Why Millennials Want to Quit their Jobs

Provided by David Malan

Twenty-eight-year-old Margaret Davis was making nice money as a writer in the legal department of a big pharmaceutical company in New York.

She liked her coworkers and enjoyed the job on a day-to-day basis — except it was not going anywhere.

The company promised Davis an international assignment, but obtaining the right working papers was a problem. Amid management shuffles, Davis felt lost in the system after four years.

As she approached 30, Davis said, “I didn’t really know there were careers in things that were interesting like interior design. . . . It was never a lucrative career choice. But here in New York I realized it can be.”

A few months ago, Davis left her job with plans to study design. In the meantime, she is working at an art gallery, which she finds much more fulfilling.

Davis is not alone. Sixty percent of millennials, ages 22-32, have changed jobs between one and four times in the last five years, according to State Street Global Advisors.

“While pay is important, it’s clear that millennials won’t stay with companies for money alone,” said David Cruickshank, global chairman of consulting firm Deloitte.

Indeed, despite a rocky job market, 44 percent of millennials would leave their current employer in the next two years, if given the choice, according to a new survey from Deloitte. When asked to look four years into the future, 66 percent of millennials said they expect to have switched employers.

Like many members of her generation, Davis has the requisite side hustles, in her case buying furniture on Craig’s List, fixing it up and reselling it. She also walks dogs for extra cash, and is always looking for new income streams.

According to job website Indeed, millennials ages 18-34 make up the largest percentage of working people who look at other job opportunities. In fact, the younger and more educated workers are, the more likely they are actively exploring new opportunities.

“Personal values have the greatest influence on millennials’ decision-making on the job,” Cruikshank said, while also noting that 61 percent of “senior millennials” – those with higher-ranking job titles – have chosen not to undertake a task at work because it conflicted with their values.

Davis does not have to look far for support. Her 27-year-old boyfriend recently left his job at a private equity firm to take a senior role at a startup coffee company in which his former employer invested. While it is still a finance position, he is also building a broad-based skill set as the company rapidly expands, she says.

Davis has no regrets on taking her own leap of faith: “I want my strengths to add value,” she says. “Before I was just lost in a big mix of a big company.”

Written by Bobbi Rebell of Reuters

(Source: Reuters)

Now Even the Cheapest Homes are Too Expensive for Millennials


Buying a home should be getting easier for millennials amid sustained gains in U.S. hiring. Instead, increased demand for a scarce supply of starter homes is pushing prices beyond their grasp.

Prices for the least expensive previously owned homes — properties at 75 percent or less of the median — were up 10.7 percent in August from a year earlier and now represent the only one of four price tiers to surpass the peak reached during the housing bubble, according to a housing index from CoreLogic Inc. The August pace was 5.9 percent above its pre-recession high in October 2006.

The gap in the the growth rate between the most expensive and cheapest homes is now the widest since 1983, with the latter rising at a pace that’s 5.2 percentage points higher than that of the top tier.

“You’ve got the front end of a big wave of first-time homebuyers but the supply of affordable housing is not there to meet that wave,” said Sam Khater, CoreLogic’s deputy chief economist. “What you’re seeing in the housing market is a reflection of the polarization of income. The builders are looking at it from that perspective: ‘If I have a choice of going up- and down-market, I’ve got to go up-market.'”

The starter-home supply crunch is worsening, adding to the pressure on prices. The bottom third of the market accounted for 24.4 percent of listings in August, according to property website Zillow. That’s down from 25.6 percent a year earlier. In Denver, where the shortage is extreme, the lowest tier accounted for just 16 percent of inventory.

Written by Prashant Gopal of Bloomberg

(Source: Bloomberg)

Forget Your Password? A Selfie May Do Just Fine

© Provided by CNBC

The camera phone has changed the way society has captured events, turning smartphone owners into citizen journalists, giving rise to photo-based social media apps and creating new products like the selfie stick.

Yet vanity is gradually adding up to dollars and cents, with more businesses begin to cater to consumers through their smartphone’s camera lens.

MasterCard (MA) recently announced it will start experimenting with a new program of approving online purchases with a facial scan rather than a password. PayPal  (PYPL) is also offering a similar concept through its mobile app and recently, Apple  (AAPL) filed a patent allowing facial recognition technology to unlock your iPhone (a practice that Samsung  (593-KR) has as well).

These trends are emerging as recent data suggest many consumers—including the hotly coveted millennial age group—have a clear affinity for using pictures rather than keyboards.

A new survey of more than 1,000 millennials found that 96 percent consider their camera crucial to their smartphone and nearly 50 percent even said their smartphone was “practically useless” without a camera. The survey, conducted by Mitek and Zogby Analytics, found that 68 percent of respondents said they would rather snap a picture than have to type something. That may be causing causing businesses to rethink how their younger consumers interact with products and services.

James DeBello, Mitek’s president & CEO, said companies are finding it important to engage with millennials on their own terms. One example DeBello cited is being able to sign up for a gym membership by taking a photo of a driver’s license, instead of having to type out information.

“The camera phone is how they want to be doing transactions and there can be revenue opportunities,” he told CNBC. “The camera is the new addiction and it’s a gateway to commerce.”

The substitution of passwords with selfies is an idea whose time appears to have come, some observers say.

“Millennials love their cameras,” said Cathy Boyle, mobile analyst at eMarketer. She attributes the growth in commerce opportunities to the rise in the cameras used n social media.

Even Twitter  (TWTR), a predominantly text-based product, has been building out more photo-based applications recently. “The applications for the camera phone are still being realized and have a long way to go,” she said.

Many believe the biggest growth for camera phone usage may be in banking. Some 54 percent of millennials in the Mitek and Zogby survey said they’ve deposited a check with Mobile Deposit—up 20 percent from just a year prior. Meanwhile, 40 percent said they would like to see more mobile use in banking.

Teddy Citrin, an investor at venture capital firm Greycroft Partners, said the camera’s potential is becoming a predominant factor in determining some of the companies in which the firm invests.

“The creative utilization of cameras has become a focal point for many new apps we see and for larger companies evolving their product,” he said.

He thinks that over the next few years, technology that harnesses camera phones will lead to an increase in doctors diagnosing and providing counsel from afar, instant appraisal of goods, and other facial recognition applications.

Security and selfies could be one way the banking sector could evolve; however, how secure it is still remains to be seen. For now, the sheer vanity the cell camera offers is its most practical application. The survey found 38 percent of the millennials take a least one selfie per day, while 10 percent taking more than 10 per day.

Citrin thinks there are many untapped applications that remain to be seen.

“Applications that power the camera will become incrementally smarter and more important,” he said. “Facial recognition, credit card reading, and augmented reality are just the start.”

Written by Uptin Saiidi of CNBC

(Source: CNBC)

Millennials Call It Sharing. Wall Street Calls It Stealing.

Barry Wetcher—20th Century Fox/courtesy Everet
Barry Wetcher—20th Century Fox/courtesy Everet

It’s no secret that young people like to consume entertainment they don’t necessarily pay for.

But when business and tech types talk about this reality, they tend to use neutral or even flattering language: Millennials, they say, like to “swap” files and “share” subscription passwords. After all, super-earnest, bike-commuting, coffee-sipping twenty-somethings don’t look like dangerous criminals. And let’s face it, no business wants to alienate the work-force’s largest generational cohort, with billions, if not trillions, worth of spending ahead of it.

But now some Wall Street analysts have decided to come right out and use another S word—steal—in discussing the problems facing some traditional media enterprises.

“The millennials are a generation that grew up (and will likely grow old) ‘sharing’ (read stealing) passwords for access to content if it continues to be ignored,” wrote analysts Mike McCormack, Scott Goldman, and Tudor Mustata in a note to clients Tuesday. “We believe it is the most significant cause of the declining pay TV subscriber base.”

The problem, the analysts suggest, is that all this sharing/stealing could quickly destroy the cable TV business. That’s hardly a far-fetched argument. Similar trends have already gutted the music and news industries.

The Jefferies analysts argue password sharing is already “the most significant cause of the declining pay TV subscriber base.” They compare the current situation to a time when people jury-rigged access to cable with “illegal cable drops, third-party set tops and reprogrammed satellite cards.” Revenues returned only when the industry cracked down.

Of course, no one likes to be called a crook. Millennials might counter that the situation isn’t totally black and white. The music industry has evolved. And sharing streaming TV passwords isn’t clearly against the rules. Passwords for the streaming service HBO Now, for instance, are limited to a household, but the company has been vague (presumably on purpose) about what that means. Netflix, Amazon, and others all have policies that similarly attempt to both acknowledge and limit sharing.

The solution? The analysts call for companies to adopt tougher rules with emphasis on “authentication limits”—essentially limits on how many people can use a log in at the same time, which some sites like Netflix and Hulu already employ. But they also acknowledge the scope of the problem—and the fact that, let’s face it, it’s not just millennials. “It is difficult to meet someone (of any age demo) that hasn’t used or allowed another to use content passwords,” they lament.

Written by Ian Salisbury of Money

(Source: Time)

Young Americans are Giving Up on Getting Rich

© Cristian Baitg/Getty Images
© Cristian Baitg/Getty Images

Young Americans’ incomes are depressed, their retirement nest eggs are microscopic, and their rate of employment is weak. The trend lines aren’t promising, either, which likely explains why there’s no shortage of pessimism out there.

In a Bloomberg poll of Americans age 18 to 35—the millennial generation—47 percent said they do not expect their cohort to live better than their parents. For one thing, it’s hard to imagine outdoing your parents if you’re still sleeping under their roof.

According to U.S. Census Bureau data, 15 percent of people age 25 to 34 were living with their parents last year, up from 10 percent 30 years earlier. High home prices and strict mortgage lending standards are prime reasons for many millennials’ failure to launch.

“They are priced out of the kind of housing that they grew up in,” says Richard Portes, an economist at London Business School.

Living at home, or living away from home but depending on help from Mom and Dad, keeps many young people from learning how to manage their finances, says Vicki Bogan, an associate professor at Cornell University’s Dyson School of Applied Economics and Management. “You don’t have any ownership, any force to push you to become financially literate,” she says.

Not all young people have student debt, but for those who do, it can be paralyzing. Jessica Xydias, 25, says she didn’t take out a lot of student loans, “but my husband did. I look at our accounts all the time. It feels crushing and insurmountable.” And the debt crimps their ability to save. While paying off loans, she says, “it is extremely difficult, if not impossible, to put money into your Roth account.”

One thing millennials do have in their favor, of course, is time. Modest economic expansion that exceeds population growth “is more than enough to support a higher standard of living for our children over time,” says Gus Faucher, senior macroeconomist at PNC Financial Services. Whether young people dig out from their deficit and end up surpassing their parents’ generation depends on some unknowable things. Will globalization and automation kill or create jobs? Will humankind be saved by nuclear fusion and a cure for Alzheimer’s, or be doomed by climate change, wars over resources, and the crippling cost of elder care?

One way to look ahead—and restore some optimism—is to look back to millennial parents’ salad days. Median wages and assets were higher, adjusted for inflation. But would you trade that life for the one you have? Would you give up your smartphone, your GPS, Google,, fresh peas in winter, and Ford F-150s with aluminum bodies that won’t rust?

It’s just as likely to envision a similar set of innovations 30 years from now that people can’t imagine living without. If so, then no matter what the official statistics say, the best years just might lie ahead.

Written by Peter Coy of Bloomberg

(Source: Bloomberg)

How Millennials Should Save for Retirement


It’s not easy being a millennial these days.

Sure, they may have piled up the trophies in their childhood, but millennials are now old enough to be attending college or embarking on careers. And they are doing so as they contend with a number of special challenges, from staggering levels of student debt to global job competition to anemic wage growth.

The problem is, those challenges make it all too easy for millennials to put off developing savings habits that could ensure a secure future. So says a new report from J.P. Morgan Asset Management on millennials and money, which has also calculated what millennials need to be saving for later life.

“Many will have to finance retirements that are longer than the number of years they work,” the report noted.

Morgan calculated desirable savings rates for millennials at different points on the income scale, and found that if median income millennials put away between 4 and 9 percent of their pretax income every year, they should be able to have just as much retirement income as working income.

More affluent millennials should be saving between 9 and 14 percent of their pretax income, Morgan found, and high net worth millennials would need to save 14 to 18 percent of their pretax income in order to have income equal to 85 percent of their working income in retirement.

In all those cases, Morgan assumed that millennials would also be putting 2 percent of their after-tax income into savings, and receiving a 50 percent employer match of their pretax savings, capped at 3 percent. The calculations also assume that people save consistently, starting no later than age 25.

Those are lofty goals, especially compared to the 3 percent average default contribution rate for millennials that T. Rowe Price found in a recent study.

“The 3 percent default rate that a lot of employers use is simply inadequate,” said Katherine Roy, chief retirement strategist for J.P. Morgan Asset Management and an author of the report. “People should be saving at a much higher rate.”

But Morgan has examined what can happen if millennials do not go that route, and it’s not pretty. An individual who retires three years earlier than planned will have fewer years of earnings, more years to live on their savings, and possibly lower Social Security income if they claim at an earlier date, Morgan calculated.

To make up the difference, a median income individual would have to earn a real return on savings of more than 10 percent, well above the actual real median return on the S&P 500 of less than 7 percent, Morgan found. (An affluent individual would have to earn roughly 9 percent, and a high-net-worth individual, close to 8 percent.)

Certainly, more people are talking about working past traditional retirement age, but in earlier research, Morgan found that the talk does not match what people actually do. Some 73 percent of people it surveyed who were in the workforce said they plan to work past age 65, but only 27 percent of current retirees actually did that.

Perhaps that is because few people reach age 65 without hitting some bumps in the road. According to a study from the Center for Retirement Research at Boston College, three-fourths of people in their 50s experience divorce, the death of a spouse, job loss, physical frailty for themselves or a loved one, or a combination. And any of those experiences can derail retirement plans.

Others have also sounded the call for higher levels of retirement saving, but Morgan is trying a novel format in a bid to generate interest among millennials. The report is structured like a proposal for a web-based show featuring various millennials with different life experiences and incomes. The episodes revolve around individuals in different careers with different home lives, incomes and obstacles in life, and the lessons they learn as a result.

“I spend most of my time with advisors and clients in their 50s and 60s, and we are all talking about these issues,” Roy said. “If a boomer parent can give this paper to a millennial and get them to focus in on the scary stuff, and say, ‘If I could do it again I would have saved more,’ ” the concepts may sink in.

Already, millennials seem increasingly aware that they are responsible for their own financial security in retirement, and they want their employers to help. The T. Rowe Price study found that the median contribution rate at which millennials said they would drop out of a 401(k) plan was 6 percent, double the current average default rate. Some 27 percent would only drop out at a default rate of 10 percent or more.

If Morgan has its way, a lot of retirement plans will be moving toward those levels.

Written by Kelley Holland of CNBC

(Source: CNBC)