A study from LearnVest, a financial wellness program provider, suggests a look into the future could convince younger employees to save more now. 

Looking at its own database of individuals using its financial education resources, LearnVest found those in their 20s and early 30s were more financially confident than those ages 35 to 54, while confidence increased again for individuals 55 and older. LearnVest looked at other studies and found they revealed this same confidence “U-curve.” 

The company set out to learn why this “U-curve” exists. According to the study, national income data from the Bureau of Labor Statistics shows that while a person’s income generally does increase over time, income growth rates actually decrease dramatically over time. Household and spending data across age brackets shows just when average income growth is slowing for Americans, financial responsibilities are reaching their highest point. 

Although earnings tend to be lower for younger employees, they also have, on average, fewer financial responsibilities, so one would think it is the perfect time to start putting away money from the future. But, LearnVest notes that data from the 2012 study for the Certified Financial Planner Board of Standards, Inc. and the Consumer Federation of America shows only 35% of people ages 18 to 24 have any money saved for retirement, far less than the 55% of people in the 24 to 34 age bracket and the 66% of people in the 35 to 44 age bracket. Many are missing out on the opportunity to establish a savings habit early and take advantage of compound growth over time. 

LearnVest found 39% of its users younger than 25 expressed financial confidence. “When we look at those under 25, it may be that we’re looking at a case of false confidence—with few current responsibilities and without a clear notion of what’s on the horizon,” it notes in the study report. 

Among those ages 25 to 34, 33% expressed financial confidence. LearnVest notes that the income growth rate from the previous age bracket is 111%, and while retirement and emergency savings contributions also begin to ramp up at this time, they may not be at the same rate that a financial planner would advise, given the upcoming financial responsibilities, retirement contributions and slowed income growth ahead. “We see a bit of an ‘I’ll cross that bridge when I get to it’ mentality, giving this age bracket a continued sense of false confidence. It appears that lifestyle spending—not savings—inflates with growing income,” the report says. 

For LearnVest users ages 35 to 44, the income growth rate from the previous age bracket is 33%. Twenty-seven percent of this age group expressed financial confidence. For those ages 45 to 54, the income growth rate from the previous age bracket is 1%, and 29% expressed financial confidence. 

The company asks whether giving confident 20-somethings a better sense of what the next 10, 20 or 30 years might look like from a financial perspective could be the cure for the overconfidence that leads to a lack of action.