When it comes to retirement readiness, those farthest away from this milestone appear the most hopeful, a new survey suggests.
According to a new survey by New York Life, 66% of “Maturing Millennials” aged 30 to 35 believe they will be in better financial shape for retirement throughout the new year, compared to 46% of Generation X (aged 36 to 51), and 33% of Baby Boomers (52 to 70).
This trend of optimism against age is reflected across different variables such as overall financial security, opportunity for career growth and spending projections, the survey found.
When asked if they believe their family will be more financially secure and better prepared for the unexpected in 2017, 71% of maturing Millennials agreed. Only 52% of Gen Xers and 36% of Baby Boomers said the same.
“It’s a tale of three cities for America’s generations as they head into 2017,” says Mark Madgett, senior vice president and head of Agency Department, New York Life. “The stark contrast between maturing Millennials and their Gen X counterparts, who aren’t all that much older, is equally promising for Millennials and worrying for Generation X. A source of tremendous concern is the Baby Boomers, who are clearly showing the strains of heading into retirement without the kind of financial planning many sorely need.”
The study found that Millennials not only are confident about their financial future, they also plan to spend more than their counterpart generations despite major challenges like student loan debt, poverty, and unemployment.
This group (64%) plans to spend more on important purchases such as home improvements, appliances, and professional wardrobe. Only 40% of Gen Xers and 23% of Baby Boomers expect to do the same. More than half (55%) of maturing Millennials even plan to boost “fun” spending such as vacations in 2017. Only 35% of Gen Xers and 22% of Boomers expect the same luxuries.
Gen Xers and Baby Boomers may need to redesign their retirement plans in light of specific challenges spanning from raising children and looking after aging parents to dealing with the uncertainty of Social Security benefits.
Meanwhile, many Millennials could feel confident about their financial future but fall back on key aspects of planning. While it can’t be said for all generations, Millennials have time on their side; still, many need to truly grasp what that means.
But it seems these generations do have one thing in common: They believe financial planning is a priority. Across all age groups, more than half plan to reduce debt, save more, and meet long-term goals. Boosting savings will be a major aspect of 2017 for maturing millennials (83%), Gen Xers (68%), and Baby Boomers (54%).
“It is important to not forget Generation X and Baby Boomers, where a strong majority have long term planning on their 2017 to-do list, but yet are less optimistic about financial success,” explains Madgett. “It is the lower optimism among Generation X and Baby Boomers, who are more likely to have a lot of financial responsibilities that could include simultaneously taking care of their children and aging parents, paying mortgages and more that is especially poignant for me. There is a major opportunity among financial professionals to break through to these older generations who are closer to retirement and in greater need for guidance around the right moves to make for their future and their family’s future.”
While all generations can benefit from professional advice, the survey found aging Millennials are most likely to work with a financial professional, with 48% saying they plan to do so in 2017.
“With these positive steps we are hopeful that this generation will live up to the optimism they are expressing in 2017 and beyond,” says Madgett.
This survey of 1,800 adults aged 30 and older was published by New York Life and fielded by Ipsos Public Affairs in December 2016.