There’s been a strong year-over-year increase in the number of Millennials socking earnings away in their 401ks, according to a new report from Bank of America.
“Building on a positive trend we’ve seen in recent years, we found that significantly more Millennials (ages 24-41) are saving. Among those who are saving, one in four has $100,000 or more set aside—up from 16% in our 2018 survey,” says Andrew Plepler, Global Head of Environmental, Social and Governance at Bank of America.
That’s not a net worth figure, so things like home value are not part of the $100,000 savings.
It does include retirement savings such as 401k funds and money invested in individual retirement accounts.
“It’s a reasonably good economy, and so for those who do save and have been able to put money into a 401k, they’ve had some nice tailwinds,” Plepler told CNBC Make It.
Nearly three in four Millennials (73%) report they are saving, up 10 percentage points in two years. Of Millennials with savings, three-quarters are saving for retirement, more than half are building an emergency fund and one-third are saving to buy a home. Over the past year, 39% of Millennials boosted their credit score, 29% secured a raise and 24% put away more toward retirement.
“Millennials are also practicing positive day-to-day money habits and achieving financial goals—like boosting their credit scores and putting away more for retirement,” Plepler says in the Bank of America report, which also shows Millennials have started saving much earlier for retirement—at age 24 on average—than Gen X (30) and Boomers (33).
Plepler told CNBC that there is much more awareness today about the need to save for retirement, and added that the popularization of target date funds and auto-enrollment programs have helped prompt retirement contributions at earlier ages.
The Bank of America survey found 67% of Millennials who have savings are utilizing employer-sponsored retirement plans, and 48% put money into savings every month.
But of course it’s not all rainbows and lollipops for Millennials.
“At the same time, we found that 27% are not saving at all. And more than three-quarters are weighed down by debt, with one in six Millennials owing $50,000 or more, excluding home loans.”
The top three sources of that debt according to the survey are auto loans (40%), credit card debt (37%) and student loans (25%).
Beyond that, one in three Millennials feel like their peers are better off than them financially, and 51% feel behind in their overall financial situation while 60% feel behind specifically when it comes to retirement savings. And 38% don’t think they will retire until they are 70 or older.
But 52% reported they would rather work harder today and retire early, instead of working longer and having more free time now.