About one in five (21%) of surveyed members of Generation Y (born between 1975 and 1991) said they are more likely to seek out a financial adviser as a result of the economic downturn, compared to 15% of Baby Boomers and 12% of Generation Xers (born between 1964 and 1974), according to the survey.
The financial crisis also helped Generation Y realize the value of savings. Respondents said their biggest financial regret was not building up a cash cushion (68%), followed by amassing too much credit card debt (43%), according to MetLife’s poll.
Of those GenYers taking action, 70% are building a “rainy day fund,” 61% are reducing spending on non-essential items, and 18% are consulting a financial adviser, according to the poll.
More than half (56%) of surveyed Generation Yers agree that the financial crisis had at least some influence on the way they save/plan for retirement (see “The Young and Restless“). Yet, more than half (54%) are not changing their approach to retirement savings/investments.
Furthermore, most Gen Yers (56%) haven’t done any retirement or financial security-related activities in the last year (44% made regular contributions to their 401(k) plans). But they did make some headway with their debt, as more than half of respondents (66%) managed to pay down debt.
“While Generation Y has no doubt been impacted by the financial crisis—job loss was particularly high among this demographic—it remains to be seen whether or not the economic downturn spurred permanent behavioral changes,” said Julia Lennox, vice president, Retirement Products, MetLife. “Now is a good time for younger individuals to take advantage of the long investment time horizon ahead of them and start building a financial safety net.
With a longer time horizon ahead of them, Generation Y shows less hesitancy toward the market and is less likely than older counterparts to take a conservative approach to retirement savings/investments, according to MetLife.
While all generations “learned lessons” from the financial crisis, members of Generation Y are far more optimistic about their ability to financially recover, and are more eager to participate in market gains than their older counterparts, according to MetLife. Nearly half (47%) of Generation Y believes that participating in market gains is more important than protecting their portfolios against market losses, compared to 73% of Baby Boomers, who rank protection against losses ahead of participation in any market gains.
While trust in financial institutions has decreased for 64% of Baby Boomers, more than half (54%) of Generation Y said that their trust in financial institutions remains unchanged over the past 12 months, according to the survey. A majority (53%) of GenYers also say that their faith in traditional retirement safety nets has stayed the same
Overall, Generation Yers are more optimistic about their own personal financial recovery than economic recovery in general. Nearly half (49%) said their personal financial recovery will happen in less than two years, while only 29% believe the economy will recover that quickly, MetLife reported. Forty-two percent of the GenYers believe the economy will recover in three to four years.
Harris Interactive fielded the study on behalf of MetLife from September 23 to 25 via its QuickQuery online omnibus service, interviewing 2,191 U.S. adults aged 18 years and older.