It is often said that you can’t teach an old dog new tricks, but when it comes to retirement planning, Baby Boomer workers should definitely take a cue from their Millennial colleagues.
That’s right; today’s youngest workers are very serious about retirement savings and personal investments. They are doing a lot of things right, and they have a lot to teach their elders about steps one can take to help secure a sound financial future.
That might initially seem strange, considering that Millennials entered the workforce during the Great Recession, many arrived deep in college loan debt, and most struggled to find their first real employment. At the same time, many of those same Millennials watched as parents lost decades worth of retirement earnings during the financial crisis.
But it is precisely because of these facts that Millennials appreciate the importance of financial planning, several experts say. Most Millennials don’t expect to receive Social Security, and they know that when it comes to saving for retirement, the buck stops with them.
Millennials are Engaged, Confident and Optimistic
For proof, consider the findings of two separate retirement studies, both of which looked at how the Baby Boomer, Gen X, and Millennial generations are dealing with a variety of retirement planning issues. While some other recent studies have offered decidedly bad news about retirement preparedness, there is a lot to like in these studies.
First up is the BlackRock 2014 Global Investor Pulse Survey, which finds that Millennials seem to be more engaged, confident and optimistic about their financial situation and future prospects than Gen Xers or Baby Boomers.
For example, the BlackRock study finds that 56 percent of Millennials regularly monitor their investments, and they spend nearly seven hours each month reviewing their accounts. Contrast that with 46 percent of Baby Boomers, who on average spend only two hours at the same activity.
Those numbers may also impact the retirement confidence levels of Millennials versus Baby Boomers. Fifty-seven percent of Millennials say they feel “in control” of their financial future, compared to 41 percent of Baby Boomers.
To be fair, there may be two significant factors influencing the above: Since Millennials aren’t counting on hand-outs at the end of the workforce journey, they obviously do feel like the captains of their own destiny. Second, they haven’t lived the longer lives—full of ups, downs and turnarounds—of their elders.
In any event, some of the key findings of the study show that Millennials have a lot to teach when it comes to retirement planning:
• More than two-thirds of Millennials surveyed (69 percent) believe that a 401(k) plan is a good way to save for retirement.
• Millennials surveyed devote an average of 22 percent of their take-home earnings to saving and another 18 percent to investing. That compares to 12 percent and 11 percent respectively for Baby Boomers. (Again, to be fair, Baby Boomers may be likely to have more financial obligations).
• Millennials are more interested in investing in the stock market than five years ago (cited by 45 percent), compared to 16 percent of Baby Boomers (Once again, Baby Boomers have seen more volativity and lost more in the market).
Desperate Times Lead to Deliberate Measures