When it comes to millennials and money, the debate rages on: Are they the new generation of “Super Savers,” as argued recently by MarketWatch, or are they “Generation Wait,” a cohort too saddled with student-loan debt and an uncertain job market to sock away any of their earnings toward their futures or invest in assets like real estate?
Encouraging research from Fidelity’s Millennial Money Survey and Transamerica’s survey on “Millennial Workers: An Emerging Generation of Super Savers” shows a generation dedicated to saving despite their financial struggles, but new numbers released by Moody’s Analytics, featured this week on CBS News and the Washington Post, show a generation of adults under age 35 who have a savings rate of negative-2 percent.
Nicole Mayer, AIF CDFA of RPG-Life Transition Specialists for Moody’s Analytics, said by press release that when it comes to saving for the future, millennials are behind the curve in comparison to past generations.
“The millennial generation is placing themselves in an increasingly vulnerable position,” says Mayer. “The statistics show that young adults are paying for short-term gratifications rather than offsetting debts or contributing to a rainy day fund.”
Mayer notes that a stagnant savings pattern during youth will make it harder to navigate life obstacles such as job transitions or unexpected expenses, let alone retirement. “Debts for the 35-and-under sect have increased while net worth has decreased,” she says. “One of the keys to having a healthy retirement account is contributing early so the funds have time to compound interest. Should this pattern continue, it could spell retirement trouble for millennials.”
Is part of the problem that millennials, who came of age during the economic meltdown, don’t trust financial institutions and don’t know where to turn for solid savings advice? Perhaps, says a new study by BNY Mellon and Oxford University; their research that shows more than 52 percent of millennials are turning to their parents for banking advice — and only 16 percent would consider using a financial adviser.
Read more on Money Observer, or download the full report, “The Generation Game: Savings for the New Millennial,” on BNYMellon.com.
April Lane is a freelance writer.