Okay, so maybe they’re not so smart. Millennials might be better savers than their parents, but that doesn’t mean they’re doing it right.
The Insured Retirement Institute (IRI) and the Center for Generational Kinetics (CGK) released new research focused on the retirement outlook of the millennial generation. It that found while 68 percent of Americans aged 20 to 37 said they are saving for retirement, only 29 percent indicated they are actively planning for retirement. The study also found that the majority of Millennials, 60 percent, believe it is more difficult to plan for retirement than to maintain a diet. “This study debunks the myth that Millennials are not thinking about retirement,” IRI President and CEO Cathy Weatherford said in a statement. “At the same time, it confirms what many have believed, Millennials are not doing enough to prepare for retirement. Bottom line, Millennials will need to do more if they want to have a financially secure retirement.”
The study explored what Millennials are doing to prepare for their retirement years. Debt reduction was the most frequently cited step Millennials are taking to prepare for retirement, with 77 percent of Millennials trying to reduce their debt. As expected, defined contribution plans will have an important part in generating retirement income for the cohort. Nearly half of Millennials, 48 percent, have a 401(k)-type retirement plan. Other key findings from the report:
- More than a quarter of Millennials are banking on either winning the lottery or receiving gifted money to fund their retirement years – 15 percent and 11 percent, respectively.
- When it comes to expenditures in retirement, 70 percent of Millennials think they will spend less than $36,000 per year – 30 percent less than the current national average, $46,757, for those aged 65 to 74.
- The majority of Millennials, 56 percent, believe they will not be able to retire when they want to, with half this group thinking they will never be able to fully retire.
- When it comes to working with a financial professional, 62 percent of Millennials would like an advisor to walk them through every step of the retirement planning process, and 87 percent said it is important that an advisor be willing to meet them in person. Only 19 percent of Millennials said they are likely to use a robo-advisor.
- About half of Millennials, 48 percent, would pick Warren Buffett to be their financial advisor, and 32 percent would choose Oprah Winfrey. By contrast, 77 percent of Boomers selected Buffett and 15 percent picked Winfrey.
- Half of Millennials believe they will be financially supporting their parents as they age.
- Millennials are more likely than Boomers and Generation Xers to cut off their children financially at age 18.