Although millennials recognize that concerns such as student debt are significant hindrances to saving, they have also learned from events such as the recession of 2008, they value the need to “save now to survive economic trouble down the road.”
It seems that millennials have learned much from entering the workforce during the great recession. A recent study by Transamerica shows that millennials believe that they are “much more likely” to recover economically from this event that Generation X and baby boomers. This may be due to their being in the workforce for a shorter period and having a longer time horizon in which to save. Or it may be due to their overall optimism to survive and thrive through difficult times.
The study shows that “two-thirds (68 %) of Millennial workers are ‘very’ or ‘somewhat’ confident that they will be able to someday fully retire with a comfortable lifestyle, demonstrating higher levels of confidence than Generation X or baby boomers.”
The study also shows that millennials know that retirement will look much different for them than it does for their parents. Most view retirement in a “phased” approach in which they “will continue to work, reduce hours with more leisure time to enjoy life, or work in a different capacity that is less demanding and/or brings greater personal satisfaction.”
Many millennials plan to work in retirement, not only for reasons of income and benefits, but because they want to stay involved or enjoy what they do. In fact the study shows that millennials are “significantly more likely to plan to work for reasons of enjoyment compared with Generation X and baby boomers.”
Contrary to what we believe, millennials aren’t sticking their heads in the sand about retirement.
Catherine Collinson, president of Transamerica Center for Retirement Studies notes that, “Our research found that three out of four are already discussing saving, investing, and planning for retirement with family and friends. In fact, millennials are twice as likely to frequently discuss retirement compared with their parents’ generation.”
It isn’t only communication but their overall interest and attention to addressing their financial future. A Wells Fargo study on millennials found that the majority of them (53%) think about their financial future daily, which is signicantly more than boomers at 40%.
The Wells Fargo study also reiterates the optimism of millennials about their future as nearly three quarters (72%) feel that they will be able to save enough for their future lifestyle as compared with the more pessimistic view of boomers at 64%.
As Alicia Munnell reported in her recent article on MarketWatch on this topic, many of us in the retirement field are surprised by the attention and actions of millennials to saving and planning for their future, as found through these recent studies. As Alicia says, the findings that millennials are saving at a younger age than those in the baby boomer generation “flies in the face of our fears and seems to be good news.”
It is good news, and maybe even those boomers like me, who view the future of younger generations in a more pessimistic manner, need to learn from the ‘young-uns’ that optimism and looking forward, not backward, is a better approach to the future.
I’d like to write more on this topic but I’m hooked on this new show that my son turned me on to called “It’s Always Sunny in Philadelphia” and I need to watch the next episode. I may not get all of the jokes but what I’ve seen has forced me to finally give up that cable station that runs episodes of shows like “Bewitched,” “Green Acres” and “Sanford and Son.”
Although, my son may not be as culturally savvy as me and unaware of the financial troubles that await him, it seems that he does have many things to teach me.