More than half (55%) are saving for retirement; however, 45% are not, according to the Wells Fargo Millennial Survey. The savings picture varies by gender, with 61% of men and 50% of women reporting they are saving.
Wells Fargo says this difference in saving rates may hinge on the fact that the median annual household income reported by Millennial men is $77,000 versus $56,000 for women. For college-educated Millennials, median annual household income is reported to be $83,000 for men and $63,000 for women.
About half of all Millennials report they are “satisfied” with their savings at this point in their lives, but the gender discrepancy is pronounced, with 58% of men feeling satisfied, versus 41% of women.
Of those Millennials who have started saving, nearly half (46%) are saving between 1% and 5% of their income for retirement; 31% are saving 6% to 10%; and 18% are saving more than 10%. The percentage of income saved by men and women greatly varies, with half of women (53%) saving between 1% and 5%, versus 39% of men. The percentages of men and women who are saving at the 6% to 10% level are both about one-third; however, more than one-quarter of Millennial men (26%) are saving at a rate greater than 10% versus only 9% of women.
Seven in 10 (72%) Millennials are confident they will be able to save enough to create the lifestyle they want in the future, but Millennial women are far less confident than their male counterparts, with 63% expressing confidence versus 80% of men.
Of the Millennials who are not saving yet, 84% say they are not doing so because they “do not have enough money to save right now,” with no difference between the genders. The survey found 55% of Millennials favor a mandatory retirement savings policy.
Millennials are struggling under the pressure of debt, with 42% saying "it is their biggest financial concern currently.” Four in 10 say their debt is "overwhelming." By gender, 45% of Millennial women feel “overwhelmed” by debt, versus 33% of Millennial men. More than half of Millennials (56%) say they are “living paycheck to paycheck,” regardless of gender.
When asked to rank their number one financial concern after paying day-to-day bills, Millennials cite paying off student loans (29%). When asked to estimate certain categories of debt as a percentage of monthly pay, Millennials report their debt breaks down, on average, as follows: credit card debt, 16%; mortgage debt, 15%; student loan debt, 12%; auto debt, 9%; and medical debt, 5%. Among all Millennials, 47% are allocating 50% or more of their paychecks to these types of debt.
Though college debt makes up a big part of the Millennial financial picture, three-quarters (76%) of Millennials who attended college agree that their college education was worth the cost. More than half of Millennials (56%) report relying on student loans to finance college. Since debt is a top financial concern for most Millennials, the most important financial advice they would impart to someone starting out is: “Don’t spend more than you earn” (33%), followed by “Get educated about your personal finances” (17%), and “Start saving for retirement now” (16%).
Despite debt concerns, three-quarters of Millennials are confident they have the knowledge to address any financial problems in the next 10 years, with 70% of Millennial women agreeing with this versus 84% of Millennial men. While their confidence is high, when it comes to estimating their retirement needs, 40% of Millennials say they have “no idea” what amount they will need. Nearly one-third (31%) say they will need less than $1 million, while 15% say they will need $1 million to $2 million.
Millennials feel confident in many aspects of their personal lives, with seven in 10 (69%) saying they feel better off financially than others in their own generation. In addition, 68% of Millennials expect their standard of living before retirement to be better than their parents.
When asked whom they trust for credible information to help them make financial decisions, a majority cited “family” (57%), followed by “financial institutions” (54%) and “personal finance experts/personalities” (50%). More than half of Millennials (55%) do not think they have enough money to have a financial adviser, but 16% are using a paid professional, up from 8% a year ago. Similar to last year, 59% of Millennials who do not use a paid adviser say they would prefer a “seasoned adviser” with years of experience, but there was a slight rise this year (from 20% to 26%) among those who want an adviser closer to their age, who can potentially better understand their financial goals.
Despite the ups and downs of the market, 59% of Millennials say the stock market is the best place to invest for retirement, representing a roughly 10 percentage point increase from last year’s study. However, the genders view the stock market differently, with only half of Millennial women (49%), and 69% of Millennial men agreeing that the stock market is the best place to invest for retirement.
One-quarter of Millennials who are saving for retirement are “not sure” how much of their savings are invested in stocks or mutual funds. About one in five (18%) say they are invested 100% in stocks or mutual funds, 26% say they are in a range of 50% to 75% in stocks or mutual funds. Thirty percent say they are invested 25% or less in stocks or mutual funds.
The 2014 Wells Fargo Millennial study was conducted online by Harris Poll on behalf of the Wells Fargo Wealth, Brokerage, and Retirement (WBR) team between April 15 and May 2. Survey respondents included 1,639 Millennials between the ages of 22 and 33, as well as 1,529 Baby Boomers between the ages of 49 and 59.