Today’s college graduates might not retire till age 75-By Mandi Woodruff

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A perfect storm of rising rents, student loan debt and a genuine fear of investing have driven the retirement age for new college graduates up to 75, new research from NerdWallet shows. That’s more than a decade later than the average retirement age of 62.

NerdWallet started predicting the retirement age for college graduates in 2013. At the time, graduates could expect to retire by age 73. Much has changed in the last couple of years, however, including an 11% surge nationwide in the cost of rent and a $5,500 increase in the amount of debt students carry after graduation ($35,051 in 2015 vs. $29,400 in 2014). Rising expenses wouldn’t be too much of a concern if it weren’t for the fact that, like workers in other generations, millennials’ wages have remained pretty stagnant over the same time period (they earned an average $45,478 in 2014, the latest year data is available, compared with $44,259 in 2012).
Overall, rising expenses could amount to $684,474 in lost retirement savings for 2015 grads, up from $560,657 for the class of 2012.

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Source: Nerdwallet

“These things affect your ability to save early in your career, which has a compounding effect over time,” says Kyle Ramsay, investing manager at NerdWallet.  
Yahoo Finance recently sat down with a group of 20-somethings to ask them what their hangups about investing are. Many cited student debt, rent and general wariness of getting into the market. Ramsay says it’s the third of these barriers — fear of the market — that could cause the most damage to millennials’ retirement prospects.
When it comes to saving cash they won’t need for at least 10 years, 40% of 20-somethings said they would rather put that money in a regular savings account than gamble it in the stock market, according to a study by Bankrate. Staying out of the market seems like a safe bet, especially for a generation who watched their parents struggle through the 2008 financial crisis. But as we’ve shown before and as NerdWallet illustrates in its study, young people tend to forget about the powerful advantage they have over older investors: time.
Today’s college graduates are saving only 6% of their income in retirement accounts that are invested in the market. A 23-year-old college graduate who starts saving 10% can retire at age 70*, five years earlier than her peers, NerdWallet found. Boosting that savings rate to 15% could potentially shave a full 10 years off retirement age, while a really aggressive saver tucking away 20% could retire as early as age 62. Thanks to compound interest, the longer money has to grow, the better.
“The two most important things millennials can do is save more and save early,” Ramsay says.
How to get started 
After graduation, expenses can quickly outpace income. To find room to invest, start by looking for ways to reduce costs. That may mean spending a few years living with roommates or family or jotting down a rudimentary budget to help you spend only what you can afford. Racking up a bunch of credit debt is, obviously, not a wise step. Start a small emergency fund — three to six months’ worth of expenses, minimum — so you’re not as likely to lean on plastic when you’re in a pinch.
When you’ve finished building up your rainy day fund, don’t stop. By this point, hopefully you’ve learned not to miss that money. Now is a good time to start saving for long-term goals like retirement by enrolling in a 401(k) through your employer or an IRA on your own. Does your employer match your contributions? You’re leaving free money on the table if you don’t take advantage of that match.

And yes, monthly student debt payments are a heavy financial burden, but they shouldn’t preempt retirement savings. The exception here is for people whose student loan interest rates are higher than, say, 6% to 7%, which is more than what you might earn by investing in the market. Check out this 60-second guide to balancing student debt and retirement savings for a few tips. There are flexible repayment options available to those with federal student loan debt that can reduce those payments. There are also student loan refinancing services like SoFi or CommonBond, which can help if your interest rates are on the higher side.

Culled from Yahoo Finance

Why rumors of retirement woes may be greatly exaggerated-By Glenn Ruffenach

Many retirees say their finances are in good shape; not retiring early may be key

Worried about money when you reach retirement? Actually,your financial journey is likely to match or exceed your expectations—if you don’t end up retiring earlier than planned.
That’s among the findings in a recent report, the “2014 Retirement Confidence Survey,” that measures the financial expectations and experiences of workers and retirees 50 and older. The study, from AARP, the Washington-based advocacy group, is a “secondary analysis” of a similarly named report from the Employee Benefit Research Institute, also in Washington.
Here’s a closer look at retirees and money:

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Culled from The Wall Street Journal

How much retirement income will you need? Maybe less than you think-By Robert Powel

New research calls the venerable 80% income-replacement rule into question

New research indicates that retirees—especially in higher income brackets—might need to replace less of their pre-retirement income than they think.

Financial planners have long suggested that individuals replace 80% of their income in retirement from various sources to maintain the same standard of living they had while working.

But in a recent article in Research magazine, Michael Finke, a professor at Texas Tech University in Lubbock, notes that the rule doesn’t necessarily reflect how a person’s income grows while he or she is working—nor how expenses change and even decline in retirement. What’s more, the guideline focuses on gross income rather than take-home pay.

Consider: In retirement, you likely no longer contribute to Social Security, Medicare and your retirement account. That means your replacement rate is down to no more than 77% of your final year’s salary—or 60% or less if you use average lifetime income, Prof. Finke says.

If you subtract other expenses—commuting and a lower federal income-tax bill (assuming you’re in a lower tax bracket in retirement than you were in your working years)—the replacement rate falls lower still.

“The 80% rule is wrong because it’s too simplistic,” Prof. Finke says. “Most of us don’t want to replace our gross income. We want to replace our paycheck.”
The guideline, he adds, is especially distorted for high-income Americans.

“The highest 20% of earners aren’t even spending half of their gross income,” he says. “So if you think they need 80% of their gross income, then they’d have to spend more in retirement than they’d ever spent during their working years—and this doesn’t sound like a good life plan.”

So, what’s a better way to figure out how much income you need?

First, if you’re at, or very near, retirement, you can use your actual target consumption, says David Blanchett, head of retirement research at Morningstar Investment Management, a wholly owned subsidiary of the Chicago-based fund-research company Morningstar Inc. For those still several years or more from leaving the office, the key is pinpointing what specific expenses will change at retirement and adjusting one’s replacement rate accordingly. “A household that is saving 20% of their pay, for example, in a 401(k) needs to replace a lower percentage of their final pay than one saving only 5% because they are used to living off less,” Mr. Blanchett says.

Prof. Finke adds: “Most of the wealthiest retirees don’t spend down their money at all. This means that if they didn’t want to give it to their kids they could have had a lot more fun when they were younger.”

Culled from Wall Street Journal

ECB's Nowotny says euro zone policy may need to become expansive

Austrian National Bank Governor Ewald Nowotny presents the bank's 2015-2017 economic forecast for …

WARSAW (Reuters) - The euro zone needs additional measures, possibly looser fiscal policy, to secure economic growth, European Central Bank policymaker Ewald Nowotny said in an interview published on Monday.
"This applies to structural reforms and fiscal policy," he said in an interview with Poland's Rzeczpospolita.
Asked if he was suggesting that the euro zone's fiscal policy should be more expansive, he said: "For a considerable time it was restrictive. Now it could be described as neutral, but there may be a need for it to become expansive."

(Reporting by Wiktor Szary; Writing by Georgina Prodhan; Editing by Balazs Koranyi)

Culled from Reuters