By MoneyWise Staff
Wednesday, August 28, 2019
The millennial generation has been plagued with the blame of killing almost everything. From napkins and cable TV to the real estate industry. Even though, millennials aren't buying starter homes as soon as they leave the nest these young adults stand out in their saving and investing manners.
From building a bookshelf to starting a business, millennials are do-it-yourselfers. These adults know that more than likely they will be responsible for saving for their own retirement. More than half, feel that their main source of income during retirement will be from a 401k, IRA or similar savings account, the pension is dead.
Money isn't a Sensitive Subject
Because millennials feel more responsible for their retirement success they are openly discussing money plans with family and friends, well more openly than past generations. According to CNBC, 75% of millennial couples talk about money at least once a week, that's 9% more than Gen X couples and 31% more than baby boomer couples.
Millennials are on F.I.R.E.
F.I.R.E. stands for Financial Independence Retire Early, this is a financial movement defined by frugality, extreme saving and investing. Not all Millennials are living by the guidelines of this focus, however, Transamerica Retirement Survey shows that 58% of Millennials plan to be retired by age 65 or sooner, and while 69% of baby boomers say they expect to work past that age. Not only do millennials expect to retire earlier, but they also expect to live longer, making them the first generation to spend more time in retirement than time spent on the job.
Simplicity is Golden
Some millennials are investing, and they are selecting investments that are easier to understand. Some of the most popular investment vehicles for millennials include index mutual funds, exchange-traded funds and employer 401(k) target-date funds. Millennial investors are more interested in sustainable investing, investing in companies or funds that take into account social and environmental impact. According to Morgan Stanley, millennials are twice as likely, compared to the overall investor population, to invest in companies targeting social and environmental goals, and 90% of millennials say they want sustainable investing as an option in their 401(k) plans.
What's the Verdict?
The millennial generation is coming up short compared to other generations in accumulated emergency funds, participation in employer retirement plans, and they seem to be a bit skittish when urged to invest. But that's not to say they are doomed. Millennials are saving at an earlier age than Gen Xers and baby boomers did and many of the challenges like student loan debt and high housing costs aren't their fault. However, saving more, maxing out the employer's 401(k) match (if available), and dipping their toes in the water of other investments would hedge the millennial's outlook to greater retirement success.
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