Nearly half (48%) of Millennials with a 401(k) contribute 10% or more on a monthly basis—which is the highest percentage of any other generation (only 36% of Gen Xers and 44% of boomers reported the same), according to the Generations Ahead Study from Allianz Life Insurance Company of North America.
In addition, 41% of Millennials reported they always set aside money each month for saving (compared to only 36% of Gen Xers) and 58% believe saving for retirement is a basic necessity, like food or housing. Many Millennials (71%) also use “tricks” to make saving money easier. For example, the majority of them use several different accounts to automatically save their money for specific purposes (one for everyday expenses, one for a particular loan, one for a special trip, etc.). Millennials also reported their median retirement savings to be $35,000, which is equal to Gen Xers, who have had less time to build their nest egg.
However, financial traumas witnessed by Millennials could have a negative effect on their financial wellness and willingness to take risk. Nearly one-quarter (24%) saw their parents suffer a major financial setback during the recession of 2008 and 2009 and possibly because of this, 57% said they are unlikely to ever invest in the stock market. On a positive note, 65% are uncomfortable with too much debt because they saw their parents struggle with it.
“While it’s promising that many Millennials are working to avoid debt and build savings, seeing such a large number of them averse to investing is a concern,” says Paul Kelash, vice president of Consumer Insights for Allianz Life. “A balanced approach to saving and investing is a strong recipe for a solid retirement and if they have worries, a financial professional can help them find the right balance.”
Social media can also be hurtful to Millennials financial wellness or sense of confidence, the survey found. More than half (55%) reported they spent money they hadn’t planned to because of what they saw on their social media feeds. The vast majority (88%) of Millennial respondents also believe social media creates more of a tendency to compare one’s wealth/lifestyle with others (versus 71% of Gen Xers and 54% of boomers). Sixty-one percent feel inadequate about their own life and what they have because of social media.The Allianz Generations Ahead Study was conducted by Larson Research + Strategy via online survey in May 2017, with 3,006 U.S. adults ages 20 to 70 with a minimum household income of $30,000.