Millennials Struggling to Establish Themselves Financially
Gen Xers are in a much better financial place, with many having paid down their student loans. This is enabling them to focus on retirement savings.
The Society of Actuaries (SOA) released a series of reports on the financial challenges and retirement perspectives affecting all generations, namely Millennials, Gen Xers, Late Baby Boomers, Early Baby Boomers and members of the Silent Generation.
The first report, “Financial Priorities, Behaviors and Influence on Retirement,” reveals that Millennials are struggling to establish themselves financially, particularly with regards to establishing an emergency fund, saving for a home and paying off their credit card debt and student loans. These obstacles may impact their ability to establish a financially secure retirement, according to SOA.
Gen Xers are in a much better financial place, with many having paid down their student loans. This is enabling them to focus on retirement savings. Eighty percent of this group have access to an employer-sponsored retirement plan.
Late Baby Boomers are the most focused on financial planning, with the majority gearing up for retirement. Fifty-one percent have a financial planning horizon of three years or more. They are targeting their investments to grow their money and produce income now and in retirement.
The most financially stable group is Early Baby Boomers. They are the most likely to be working with a financial adviser, and 60% say they could afford a sudden expense of $10,000. Additionally, approximately three-quarters are retired.
The Silent Generation has fewer savings priorities. Like Millennials, they lack financial stability.
“This research demonstrates that consumers face unique financial priorities throughout all stages of life, and that even the oldest group we studied, the Silent Generation, is not free from vulnerability,” says Anna Rappaport, chair of the SOA Aging and Retirement Strategic Insight Program. “Millennials in particular should pay off student loans and other debt, so that they can take steps to focus on longer-term issues, such as retirement security. This is especially important knowing the challenges their predecessors still face and that they may face even tougher financial challenges due to the large student loan balances many have when they enter the workforce.”
A second SOA report is focused specifically on Millennials, “Difficulties in Gaining Financial Security for Millennials.” Thirty-four percent say that debt is complicating their finances. Thirty-three percent have student loans, the largest amount of any generation.
Millennials are also worried about the value of their investments keeping up with inflation, that they may not be able to maintain a reasonable standard of living in retirement or that they could outlive their savings.
Forty percent of Millennials feel overwhelmed by their financial situation, compared to 22% of all other generations.
Fifty-six percent of Millennials say their generation has a harder time achieving financial security than their parents. Forty-four percent of Baby Boomers and the Silent Generation say that the younger generations have it harder than they did in terms of achieving financial security.
Greenwald & Associates conducted the survey for the Society of Actuaries.