Mention Millennials and behavior and it typically evokes exaggerated eye rolls and sharp exhales, yet with 401k savings, they’re apparently doing it right.
New research from Schwab Retirement Plan Services shows that, despite the financial challenges they face, Millennials are taking positive steps in their 401k saving and investing habits.
Not only are Millennials focused on their financial future, but they are also open to professional assistance in managing their money in the present.
In fact, all three generations recognize the importance of the 401k in helping them meet their retirement savings goals, with 86 percent of Millennials, 90 percent of Gen Xers and 84 percent of Boomers considering it a “must-have” benefit.
Millennials are especially reliant on 401ks for the money they’ll need in retirement, with 78 percent saying it’s their largest or only source of retirement income.
“It’s heartening to see that saving for retirement has become a priority for so many workers, especially the youngest generation of workers, for whom retirement can seem like a lifetime away,” Steve Anderson, president of Schwab Retirement Plan Services, said in a statement. “Our findings show that, in spite of—or perhaps because of—the financial challenges they faced as they entered the workforce, Millennials know how critical it is to keep on top of their finances today with an eye toward tomorrow.”
On Track, Despite Hurdles
The study reveals that Millennials are disproportionately affected by money-related stress. Specifically, financial stress has affected the job performance of more than a third of Millennials, compared to 18 percent of Gen Xers and 11 percent of Baby Boomers. Not surprisingly, student loan debt impacts many Millennials, with 24 percent citing it as a source of financial stress.
Even in the face of those obstacles, Millennials report that they are on top of their personal finances each month. Eighty percent say they are caught up on bills and have some money left over at the end of the month.
Putting Goals into Action
With the money they have left over each month, Millennials are taking positive steps to save and invest. A quarter say they invest that money in the stock market. Millennials are also more likely to put any extra money towards their 401k than older workers: 34 percent of them report doing so, compared to 20 percent of Gen Xers and 8 percent of Boomers.
Millennials are also savvy when it comes to the fees they pay for their retirement investments. Half of these younger workers say that fees influence their choice of 401k investments “a lot,” compared to 40 percent of Gen Xers and 38 percent of Boomers who say the same.
Confident Savers, Still Want Help
The survey reveals that, when it comes to making investment decisions on their own, more Millennials are confident than are their older counterparts. Sixty-four percent say they are very or extremely confident making investment decisions solo, compared to 47 percent of Gen Xers and 39 percent of Boomers. That said, investment confidence would skyrocket for all three generations with the added help of a financial professional. Eighty-five percent of Millennials, 73 percent of Gen Xers and 72 percent of Boomers would feel that same high level of confidence with the aid of a professional.
The survey also shows that Millennials are highly receptive to professional financial help:
- Eighty percent would like personalized investment advice for their 401k.
- Even though they have had less time in the workforce to accumulate wealth, nearly two-thirds of Millennials feel that their financial situation warrants professional advice.
- Millennials are also very likely to take advantage of a financial wellness program at work: 93 percent say they’d use the resource.