Millennials and Retirement: (Less) Money, Mo' Problems

August 8, 2017

If you’re fortunate enough to call yourself a millennial, there’s a good chance you’ve heard a thing or two about what the world thinks of you. While the constant chatter about all things Gen Y might make you feel like the prettiest girl at the party, there’s a good chance the talk you’ve heard can have a pretty negative slant to it. Google the term millennial, and the Internet gives way to thousands of studies, articles, and op-eds describing defiant, lazy, self-centered humans. Um…thanks?

Even the more positive discussions about young peeps can’t seem to get past the fact that millennials deviate from the norms of the generations before them—but is that so surprising? After all, younger generations splitting from the opinions of their parents isn’t anything new, and we’ll bet you your mom and dad likely did the same thing when they were young (don’t even get us started on Woodstock).

While stats about growing unemployment rates, low income levels, and large sums of student loan debt paint a pretty dismal picture of Gen Y, there are a few explanations behind those stats worth mentioning. For starters, millennials are making less money today than their parents did at the same age—which in turn affects how they spend, save, and deal with debt. Couple that with the fact that bachelor’s degrees hold less value in an already difficult job market (making it tricky to climb that corporate ladder), and it’s no surprise that 63% of millennials have said that they know someone who had to move back home because of the economy. What’s more, they’re positioned to deal with some pretty intense global problems in coming decades…so hey, we for one can understand why the choices they make might be different than those of generations past.

BUT, there are also some really, really good things about the millennial generation, including their willingness to donate money, goods, and services to others (81% said they had in one 2011 study), and the fact that they’re anticipated to be the most educated generation in history (which might help justify all that debt). In addition to their generosity, knowledge, and evident optimism, they’re also on track to be a group of retirement-savings wizards.

In fact, millennials are eager to plan for retirement—and they’re taking matters into their own hands. According to a 2016 study by Natixis Global Asset Management, young people are beginning their retirement-saving journey earlier than their parents did, with the average age of retirement planning beginning at just 23. What’s more, millennials responded more favorably than Generation X (age 35-50) and Baby Boomers (51+) to the idea of mandating both employers and employees to contribute a certain amount of money to a retirement account each month. Plus, 82% of those studied agreed that employers should be required to offer retirement plans to their employees.

Here’s where the irony is evident: millennials are more eager and more willing to save for retirement, yet they have far less money to do so than they need. It’s no wonder then that 75% of Gen Yers are wanting more information and advice about how to achieve their retirement goals (oh hey, that’s where The Dime comes in). Millennials are also increasingly aware that retirement planning is an individual task, and that the responsibility of securing a healthy financial future lies on their shoulders.

Because money will probably never fall from the sky, the growing disparity between millennials wanting to save more while also making less probably doesn’t have an easy fix. But, their foresight into retirement planning definitely warrants some applause, and there’s definitely more than meets the eye when you look at the challenges they face as a group. Dismantling the myths that plague them is important for everyone who has a hand in the savings game—and better understanding how they tackle obstacles to meeting their financial goals might just shed some light on solutions to the retirement crisis. Time is of the essence in retirement planning, but we’re pretty confident millennials have their eye on the clock.