Millennial 401(K) Savers Have Better Financial Habits than Baby Boomers: T. Rowe Price

Maybe they know a thing or two after all.

A new survey finds those “tech-obsessed, entitled” millennials with 401(k)s are generally living within their means and more likely to budget than baby boomers.

T. Rowe Price’s Retirement Saving & Spending Study finds that while millennials are not saving at least 15% of their annual salary for retirement, they nonetheless recognize that saving for retirement is important and are interested in saving more.

More millennials than baby boomers track expenses carefully (75% vs. 64%) and stick to a budget (67% vs. 55%). And while baby boomers on average are saving a slightly higher percentage of their salary for retirement than millennials are saving, more millennials have increased their retirement savings within the past 12 months (40% vs. 21%). This suggests that they are acting in accordance with their financial priorities, as millennials ranked contributing to a 401(k) but below the match and paying down debt equally as their top priority.

“It’s encouraging to learn that millennials are so receptive to saving for retirement and are generally practicing good financial habits,” says Anne Coveney, senior manager of “Retirement Thought Leadership” at T. Rowe Price. “These millennials are working for private sector corporations, with a median personal income of $57,000 and an average job tenure of five years. So their circumstances may be somewhat driving their behaviors. When they have the means to do the right thing, it appears that they often do.

“However, they are also being affected by the flat income environment, with median raises of only 3% over the past 12 months. Yet they are exhibiting financial discipline in managing their spending and are defying stereotypes that this generation is prone to spend-thrift, short-sighted thinking,” says Coveney.

“The differences between millennials and baby boomers have significant implications for retirement plan sponsors and advisors,” says Aimee DeCamillo, head of T. Rowe Price Retirement Plan Services, Inc. “Baby boomers have largely shaped the defined contribution system, but it’s clear that millennials think differently and are more comfortable being auto-enrolled at higher levels. Because millennials are the largest generation ever within the U.S. and are entering the workforce in large numbers, plan sponsors and advisors need to begin incorporating millennials’ preferences and practices into their workplace retirement plan designs. They are benefiting from retirement plan auto-services and want more of them.”

MILLENNIALS VS. BABY BOOMERS

MILLENNIALS ARE MOSTLY SAVERS

401(K) AUTO FEATURES WORK

UNDERSTANDING OF TARGET DATE FUNDS

WHO IS NOT SAVING IN THEIR 401(K) PLAN

 

Exit mobile version