Millennials are less likely to plan ahead than older generations, according to two recent studies.
A recent financial wellness survey conducted by Harris Poll on behalf of the Million Dollar Round Table (MDRT) found that 50% of Generation Y — more than the reported 35% of Generation X and 25% of boomers — have not done anything to prepare for retirement.
Moreover, the UBS Investor Watch for 1Q 2015 also found that millennials aren’t planning.
“Our research shows that, across the different generations, millennials say they are least likely to plan ahead, focus on the long term, stay calm during volatility and avoid herd mentality,” states the UBS Investor Watch.
Evidence of this is in the percentage of millennials, more than any other generation, that report they wish they had done something differently with their money during the financial crisis and the following rebound.
Participants were asked “Looking back, do you wish you had done anything differently during the financial crisis or afterwards?” and 70% of millennials responded “yes” – compared with the 51% of boomers and 63% of Gen Xers.
Some of this regret may be due to millennials’ lack of financial knowledge. The UBS Investor Watch found that “many millennials have limited knowledge of financial concepts and terminology, compared with other generations.”
Of the millennials surveyed, 4 out of 10 understand “liquidity,” 3 out of 10 understand “market capitalization” and “basis points,” and just 2 out of 10 understand “Roth IRAs” and “beta.”
“Millennials’ limited financial acumen may contribute to their reluctance to invest in financial markets,” UBS Investor Watch states. “They hold significantly more cash than any other generation, despite their longer time horizons.”
Millennials’ investment approach tends toward the extremes. Some exercise excessive caution and are much more likely to feel they don’t know enough about investing to achieve their goals. Others are more likely to think they are skilled at picking individual investments and at timing the market.