Just as the Great Depression informed an earlier generation, the recession of 2008 has taught millennials a valuable lesson.
Eighty percent of millennials in a new survey by Wells Fargo said the recession of 2008 had convinced them they had to save “now” to “survive” economic difficulties later on.
But many are not are able to act on this lesson. More than half of millennials surveyed, 56%, said they were “living paycheck to paycheck,” and 40% said their debt was “overwhelming.”
Still, 55% of millennials said they were saving for retirement: 61% of men and 50% of women. Well Fargo said the difference in saving rates may have to do with the fact that millennial men reported median annual household income of $77,000, while women had median income of $56,000.
For college-educated millennials, median annual household income is reported to be $83,000 for men and $63,000 for women.
About half of all millennials reported satisfaction with their savings at this point in their lives, but the gender discrepancy was pronounced, with 58% of men feeling satisfied, compared with only 41% of women.
“The silver lining of the recession that started over five years ago is that a majority of millennials get that saving is a necessity and even equate it with ‘surviving’ tough times,” Karen Wimbish, Wells Fargo’s director of retail retirement, said in a statement.
“But millennial women are starting out their working lives making far less than men and, as a consequence, are saving less and feeling less contentment at the start of their working lives.”
Harris Poll conducted the online survey on behalf of the Wells Fargo Wealth, Brokerage, and Retirement between April 15 and May 2. Survey respondents included 1,639 millennials age 22 to 33, as well as 1,529 baby boomers ages 49 to 59. The Debt Crunch
Forty-two percent of millennials said debt was their biggest financial concern at present, and 40% said their debt was “overwhelming,” versus 23% of baby boomers who felt the same.
Forty-five percent of millennial women said they felt overwhelmed by debt, whereas 33% of millennial men felt that way.
Twenty-nine percent of millennials said their number one financial concern after paying day-to-day bills was paying off student loans. Forty-four percent of boomers cited saving for retirement as their top financial concern.
Despite the student loan albatross, 76% of millennials said their college education had been worth the cost.
Millennials reported the following breakdown, on average, of their debts as a percentage of monthly pay:
- Credit card debt, 16%
- Mortgage debt, 15%
- Student loan debt, 12%
- Auto debt, 9%
- Medical debt, 5%
Among all millennials, 47% were allocating half or more of their paychecks to these types of debt.
Retirement and Saving
Gender differences popped up again in questions about progress in accumulating investable assets. College-educated millennial men reported median household investable assets of $58,500, while college-educated millennial women reported $31,400.
Of millennials who had started saving, 46% were saving between 1% and 5% of their income for retirement, 31% were saving 6% to 10%, and 18% were saving more than 10%. Fifty-three percent of women reported saving between 1% and 5%, versus 39% of men.
About a third of both women and men were saving at the 6% to 10% level. And 26% of millennial men were saving at a rate greater than 10%, while only 9% of women were doing so.
Seventy-two percent of millennials were confident they would be able to save enough to create the lifestyle they wanted in the future, but only 63% of women expressed confidence, compared with 80% of men.
Of the 45% of millennials who were not saving yet, 84% said this was because they did not have enough money to save at present, with no difference between genders.