Tackling Debt Trumps Saving for Most Millennials

More than half (54%) of Millennials say debt is their “biggest financial concern currently,” according to a Wells Fargo Retirement Survey.

Forty-two percent of Millennials say their debt is “overwhelming,” twice the rate of Baby Boomers who were also surveyed for comparison.   

However, nearly two-thirds (61%) of Millennials see themselves as “savers,” with 66% of men and 56% of women describing themselves this way. Forty-nine percent say they are saving for retirement (54% of men and 43% of women), and 51% say they have not begun to save but plan to by a median age of 30.   

Of the 51% of Millennials who are not yet saving, 53% say they are “overwhelmed,” and this is slightly more pressing for women (55%) than for men (51%). When asked what barriers are preventing them from saving, 87% say they do not have “enough money to start saving” or they want to pay down debt first (81%).   

Paying off student loan debt is the top concern of Millennials. Nearly two-thirds (64%) say they financed school through student loans, compared to only 29% of Baby Boomers who financed through loans. Nearly half of Millennials (49%) say if they had $10,000, the “first thing” they would do is pay down student loan or credit card debt.

Of the 49% who have begun to save for retirement, when asked what was their biggest trigger to start saving for retirement, one in three Millennials (34%) say “they realized that starting early can result in a bigger nest egg down the road,” and more than one-quarter (29%) indicated that the presence of a work place retirement plan was the motivation. For the subset of Millennials with various retirement savings vehicles: 72% say they are in employer-sponsored retirement plans; 40% in an IRA; and 33% in a bank savings account.   

Of those Millennials that have accumulated retirement savings and are currently saving, 47% are saving between 1% and 5% of their income for retirement; 31% are saving 6% to 10%; 14% are saving more than 10%; and 8% are no longer saving.   

Nearly half of Millennials (49%) say they are confident in their own abilities to earn and save money for their financial future, and more than one-quarter (27%) say “time is on my side for my savings/investments to grow.” Seventy percent are “very” or “somewhat confident” that they will be able to save enough to afford the lifestyle that they hope to have in retirement.   

More than half of Millennials (52%) say they are “not very confident” or “not at all confident” in the stock market as a place to invest for retirement. This is particularly true for Millennial women of whom 67% are “not very confident” or “not at all confident” in the market versus Millennial men (38%).   

For those saving for retirement, 32% of Millennials are “not sure” how much of their savings are invested in stocks or mutual funds. Nearly one in five (18%) say they are invested 100% in stocks or mutual funds, 14% say 75% stocks/mutual funds, 10% say 50% stocks/mutual funds, 15% say 25% stocks/mutual funds and 11% say they are all in cash/bonds.

Millennials feel it is important to learn about financial literacy in school. A majority (79%) thinks personal finance should be taught by high schools, 73% say it should be taught by colleges and 70% feel it should be taught by parents. The top three personal finance topics Millennials “wished” they learned more about in school are: basic investing (70%), how to save for retirement (60%) and how loans work (59%).   

More than half (57%) say their parents most influenced them and the way they view money. A majority (78%) say they learned “a great deal” or “somewhat” from their parents about personal finance. In fact, parents were top ranked (60%) when Millennials listed where they are most likely to go for advice when investing their money. However, only 46% say both their parents were “savers.”   

Millennials most often turn to family for advice about money. When specifically investing, 36% turn to their parents or other family members as their first source for guidance, followed by a paid professional investment adviser (17%) and online sites (15%). A majority of Millennials (59%) say they would be interested in working with a financial adviser, and 57% of them would prefer a seasoned adviser with years of experience, over someone who is closer in age and in the same life stage as them. Similar to Baby Boomers, Millennials prefer face-to-face meetings when establishing financial relationships.  

The research was conducted by Market Probe, Inc. on behalf of Wells Fargo Retirement. Survey respondents included 1,414 Millennials between the ages of 22 and 32 from the Ypulse, Inc. online panel, and 1,009 Baby Boomers between the ages of 48 and 66 from the Research Now online panel. The research was conducted between February 6 and 15, 2013.