Reviewed by: Lacey Muenstermann
As a new generation enters the Huntsville workforce, who is prepared for retirement?
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The current workforce in Huntsville is dominated by three distinct generations of workers — Gen X, Millennials and Gen Z — and despite being in different career stages, all of them should be thinking about retirement, although not in the same way.
We spoke with an expert with the University of North Alabama’s Sanders College of Business & Technology on preparing for retirement, and who is preparing the right way.
Never too early to think about retirement
To someone just now entering the workforce, retirement is likely not top of mind. But according to the University of North Alabama’s Sanders College of Business & Technology Associate Professor Dr. Heather Rhodes, it should be.
Rhodes says not enough Gen Xers and younger are adequately preparing for retirement. In fact, the average Gen Xer’s retirement savings comes to around $130,000 — a monthly income that is lower than minimum wage.
“Assuming an individual enters retirement at 65 lives until 85, and earns about 5 percent a year on their investment, that would provide roughly $860 a month in income. If you equate that to an hourly wage rate, $860 a month works out to $5.38 an hour for a full-time job, not nearly enough to maintain a decent quality of life.
Even the youngest among the generation are entering their 40s, and forty percent (of them) have absolutely nothing saved.”
Dr. Heather N. Rhodes, Associate Professor of Finance, University of North Alabama
Studies show that Millennials (born between the mid-1980s and 1999) are more likely to be college-educated, but Rhodes says they may be even less prepared for retirement than prior generations, for a few reasons:
- Many left college with significant amounts of student debt
- Those same grads entered the workforce just following the Great Recession where it was more difficult to find a job and earnings tended to be lower
- Millenials who have saved have done so during a period of historically low interest rates, meaning that what they saved may not have accumulated a lot of compound interest
Rhodes said Generation Z (born between 2000 and 2012) may “give all of us a lesson in saving for retirement,” citing a 2022 study published by BlackRock.
The study indicates that Gen Z is saving about 14 percent of their salary for retirement, outpacing both Gen Xers and Baby Boomers, who reported rates around 12 percent in the same survey.
So, what are the best ways to prepare for retirement?
“By far the most important key is to start as early as possible. Generation Z is not only investing more than earlier generations, but because they are starting earlier, they are really going to reap the benefits of compound interest.”
Dr. Heather N. Rhodes, Associate Professor of Finance, University of North Alabama
Aside from starting early, Rhodes offers some other tips for saving for retirement:
- Set savings goals. If the rising cost of living makes it feel impossible to save for retirement, don’t feel like you have to immediately start with saving 15 percent of your salary. If you can only save a small amount, that’s still better than nothing.
- If your employer offers a retirement plan, contribute to it. Traditional 401(k) accounts allow you to contribute pre-tax earnings, which means that by saving for retirement, you are lowering your taxable income for the year and the taxes that you would otherwise owe.
- Even if you don’t have access to an employer-sponsored retirement plan, you can save for retirement on an individual basis with an IRA as long as you have earned income in the form of wages or salaries.
HudsonAlpha team awarded $1 million grant
HudsonAlpha Institute for Biotechnology was recently awarded an Experiential Learning for Emerging and Novel Technologies grant from the National Science Foundation.
The grant — for up to $1 million — will provide STEM education for local middle and high school students for the next three years.
The award will fund:
- Two experiential learning programs in genomics and biotechnology
- The existing Launching Aspiring Biotechnology Students program, a year-long program for high school students
- A new SPARK program for middle school students, with similar goals of building biotech skills, scientific content and STEM confidence
“This is an incredible opportunity for our education program to bring life-changing STEM education to students across Huntsville and Madison County in an innovative way.”
Kelly East, VP of Educational Outreach at HudsonAlpha
This is the second ExLENT award presented to HudsonAlpha.
Unemployment rate in Alabama remains below national average
In August, the unemployment rate in Alabama remained at 2.8 percent , which was the rate reported in July as well. This remains well below the national rate of 4.2 percent.
Here’s what unemployment rates look like in North Alabama:
| Madison County | August 2024 rate: 2.8% | August 2023 rate: 2.3% |
| Morgan County | August 2024 rate: 2.8% | August 2023 rate: 2.3% |
| Limestone County | August 2024 rate: 2.9% | August 2023 rate: 2.4% |
| Marshall County | August 2024 rate: 2.9% | August 2023 rate: 2.3% |
| Jackson County | August 2024 rate: 3.5% | August 2023 rate:: 2.7% |
| Lauderdale County | August 2024 rate: 3.4% | August 2023 rate: 2.9% |
| Lawrence County | August 2024 rate: 3.3% | August 2023 rate: 2.7% |
Look for our monthly North Alabama business news roundup this time next month, brought to you by the University of North Alabama Sanders College of Business & Technology.
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