I often wonder if I would care as much about my retirement if I didn’t work for a pension plan. Probably not.
We millennials, those of us born between 1979-1996, seem to be focused on starting careers, buying homes, SUVs, and paying off student loan debt. Not to mention saving for our own kids’ college. Many of us also are entering the workforce during challenging economic times which have made it difficult to find work. With all of these financial distractions it would be easy to assume that the Millennials are a generation whose retirement dreams are on shaky ground. I cerainly have made this assumption based on my obversations. But maybe I was wrong.
Recent research suggests there is hope for me and my peers. A report by the Transamerica Center for Retirement Studies calls Millennials ‘super savers’ for their focus on stashing money away for retirement.
Super savers? Us? No Way!
Yep, it’s true according to Transamerica. The study reports that 75% of working Millennials are saving for retirement and that many started saving around 22 years of age – very young compared to other generations. Transamerica also found that the median contribution rate is 10% of pay for this group!
Wow, I had no idea we were doing so well.
Or are we? The Transamerica report focused on a single aspect, the number of millennials saving for retirement. But what about other aspects of financial health? I decided to do a little more digging to see if it’s too early for us Millennials to pat ourselves on the back.
Millennials are more likely to cash out retirement savings when they switch jobs. According to Fidelity Investements, 35% of workers cash out their retirement savings when switching jobs. Of those workers in the 20-39 age group, the percentage is 40%. Millennials are also chronic job hoppers and leave thousands of employer paid retirement dollars on the table each year because they change jobs before they are vested.
Millennials carry the lowest credit card balances. Experian’s 2013 State of Credit study found that the average credit card balance for Millennials is $2,682, the lowest of any generation included in the study. Baby Boomers carry the highest average balance at $5,347 and Generation X is right behind them at $5,343. Experian also reports that Millennials are below the national average in total debt and hold the lowest number of bankcards compared to other generations. However, we do have trouble paying bills on time and have the lowest credit scores of any other age group.
Paying off student loan debt accounts for 12% of of monthly pay. A recent study conducted by Wells Fargo found that Millennials are spending a significant portion (12%) of their monthly income paying down student loan debt and 40% of survey respondents said they felt “overwhelmed” by debt. However, the average student loan balance for a 2012 graduate is around $29,600 so this burden does seem managable.
In scrolling through articles about millennials and finances I found a recurring message that young people in America are a generation of savers. We apparently learned our lesson as witnesses to the Great Recession and are taking steps toward securing our financial future and stashing funds away. Now if we could just learn about retirement plan rollovers and how to pay our bills in a timely fashion.
Do you agree that Millennials are super savers?