Roughly half of all millennials are prioritizing delicious meals today over savings for tomorrow. New data from LendEDU, which surveyed 1,000 Americans ages 22 to 37, found that 49 percent spend more on dining out than they put towards retirement. Over one in four, or 27 percent, are spending more just on coffee than they are managing to sock away.
To some degree, this makes sense: Many young people, especially those straight out of college, haven't set up retirement accounts yet, but "they have likely been paying for coffee and dining out for quite some time," Mike Brown, a research analyst at LendEDU, tells CNBC Make It. "So it would make sense that a solid contingent is spending more each month on one thing than saving for retirement."
In the long-term, though, millennials who are too focused on menus could be missing out on thousands. While splurging on the occasional Starbucks run or dinner out with friends won't have significant consequences, the totals can add up. And cutting back a little can add up too.
"With the way that a retirement account can grow quickly due to compound interest, a consumer might see some great results if they simply don't get a coffee one or two days out of the week, or eat in every once in a while, and instead put that money into their retirement account," Brown says.
Brown's right: Thanks to compound interest, investing just $100 a month over 40 years adds up to more than $200,000, assuming a 6 percent rate of return.
The good news is that millennials who do contribute to a retirement fund put in an average of $480 each month, LendEDU reports. But the downside is that far too many — nearly 40 percent — aren't putting anything away at all.
Other reports have found similar results. A recent GoBankingRates survey found that 46 percent of young millennials, those aged 18 to 24, have $0 in their banking accounts. Older millennials aged 25 to 34 didn't fare much better: over 40 percent have nothing saved.
If you haven't started yet, it's crucial to begin saving and investing as early as you can to ensure you'll have enough to comfortably cover your expenses in retirement. For most people, contributing to an employer-sponsored 401(k) plan is the simplest way to start. If your employer offers a match, you're essentially getting free money.
If your company doesn't offer a 401(k) plan, or even if it does, consider other helpful, tax-advantaged retirement funds such as a Roth IRA or traditional IRA. Read up on the different types of retirement accounts here.
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