Spoiled, entitled? More like smart.
Over half of millennials are making contributions to 401k accounts and about four in ten are contributing to personal savings.
They’re saving at higher rates than the 46 percent of baby boomers and 36 percent of GenXers with no retirement savings, according to a new survey from the Insured Retirement Institute.
With a quarter century until the first of them turn 65, millennials very much view themselves as “on their own” with regard to retirement income, and are saving for what they see as the biggest benefit of being retired: freedom.
Millennial understanding and expectations for retirement are influenced by their lack of confidence in Social Security retirement benefits and the demise of the traditional defined benefit pension. Only a quarter of millennials are confident they will realize meaningful income generated from these sources.
“While millennials are saving, most are not planning, with only 34 percent of them having sought the advice of a financial advisor,” IRI President and CEO Cathy Weatherford said in a statement.
She added that the top three financial areas millennials want help with are calculating retirement savings goals, paying off debt, and creating a retirement plan, and advisors therefore “have an opportunity to help millennials increase their wealth and prepare for retirement.”
Key findings from the report:
- Millennials want flexibility and choice during retirement: the majority associate the word “freedom” with their feelings about retirement, and 50 percent believe retirement means being able to decide whether, and/or how much, to work.
- Only one in four millennials believe Social Security will provide meaningful income during their retirement years, versus 53 percent who believe they will realize meaningful income from a workplace retirement account; among those with a bachelor’s degree or higher this rises to 62 percent.
- A third of millennials expect health care costs to be their largest expense during retirement, ahead of housing and utilities (27 percent) and travel/leisure (18 percent).
- Two-thirds have not consulted a financial advisor.
- Four in 10 cite trust as their top consideration in choosing a financial advisor, versus 21 percent naming the ability of the advisor to provide services they cannot perform themselves as their top consideration.
- Nine in 10 are open to using their parents’ financial advisor(s).