Millennial Debt, Savings Trend Down

Those in their early 20s carry just half the debt of those in their upper 20s, new analysis shows, but savings rates for both groups are decreasing.

Overall, Millennial debt started trending down in 2011, according to PNC’s most recent Financial Independence Survey, which studies the financial patterns and mindsets of workers age 20 to 29.

Key findings in the survey show investors between the ages of 20 and 24 who have debt carry an average of $17,100, while their older peers carry $35,600. Even with the disparity, Millennials across the two age groups carry 30% less than in 2011.

The news isn’t all positive for young workers, though, as savings rates are also trending down.

Carrying Debt Differently

Nearly one third of the younger Millennials reported carrying no debt whatsoever, compared with about 20% for the older set. Among respondents with some level of college education, average reported debt came in at $31,800, a 30% drop from $45,400 in 2011.

“Financial maturity in this generation has noticeably shifted,” says Cary Guffey, a financial adviser at PNC Wealth Management. “Younger Millennials just entered adulthood when the economy shifted downward and as a result, it’s clear they’ve become more cautious by avoiding debt.”

Categories of debt also highly varied between the two groups, PNC’s analysis shows.

In the older set, debt amounts were reported at double, triple and quadruple that of their younger peers when it came to car loans, credit cards and mortgages, respectively. One category where both age groups fall in line with one another is education; about 40% of respondents, regardless of age, claim to hold debt from student loans.

Varied Saving Patterns

While debt numbers are trending down, so is the number of Millennials claiming to save, dropping 6% since 2011. Younger respondents, results show, are more likely to save (90%) than their older peers (83%).

Younger workers also save more of their annual income for short and long-term savings (59% combined) than the older set (52% combined).

Even as savings rates decrease, Millennials continue to hold ambitious goals when it comes to major life events that require financing in their future. Regardless of age, three-quarters (74%) think they’ll own a home before age 35, two-thirds think they will retire before or in their early to mid-60s, and more than three in five (62%) claim to have considered starting a business.

Researchers warn that reported saving patterns do not currently reflect these aspirations. Just 11% of Millennial respondents claimed to save for buying a home, 4% percent for starting a business, 9% percent for starting a family and just 6% for retirement. The top savings category regardless of age is emergency funds.

Millennial goals are ambitious, but not un-attainable, when it comes to owned assets, careers and retirement, PNC experts argue. Based on survey results, credit scores and saving continue to stand out as categories where young adults are generally not taking action.

PNC experts also stress that 20-somethings should start saving more for retirement—especially when contribution matching is available through a workplace qualified retirement plan.

More on the survey results is available here.