What are some of the things that keep you up at night? A new study reveals that these financial worries might be the same ones that your younger counterparts are having.
According to a survey published in April by Northwestern Mutual titled “2015 Planning and Progress Media Study: Millennials and Money,” just like the general population and pre-retiring boomers, millennials are worried that their savings won’t be enough to be comfortable in retirement. They also worry that Social Security may very well not be there by the time their retirement age rolls around. What’s more, they are concerned about rising health care costs. Like boomers, millennials fear that they may need to keep working well past the traditional retirement age.
The survey also found that 53 percent of millennials said they have “set financial goals,” but only 16 percent sought advice from an advisor or financial professional, and only 8 percent established an ongoing relationship with one.
The study was conducted by Harris Poll and is based on a survey of 5,474 Americans from January 12 to January 30, 2015.
(Note: Click on the tables throughout this article to enlarge view.)
Opportunity No. 1: Establish relationships with millennials.
When compared to the general population, only 40 percent of millennials have set financial goals. Eighteen percent sought advice from an advisor, and slightly fewer (17 percent) established a relationship with their financial professional. This leaves a lot of opportunity on the table to work with millennials, gain their trust and establish a long relationship with them.
Opportunity No. 2: Plan to achieve financial security.
Millennials (34 percent of them) think that a lack of financial planning is a great obstacle to achieving financial security in retirement planning, though it’s not their top concern (that’s saving enough, at 49 percent). Meanwhile, 23 percent of the general population said that lack of planning is an obstacle; their main concerns are rising health care costs (51 percent), not saving enough (46 percent) and Social Security uncertainty (38 percent).
Two other interesting facts that stand out from the survey are that millennials seem to not be concerned by what’s going on in Washington (15 percent vs. 25 percent of the general population) or about market volatility (14 percent vs. 19 percent of the general population). This may be due, in part, to the fact that millennials are just entering the workforce and are getting acquainted with how changes in laws and regulations can affect the way they save for retirement. Additionally, members of Gen Y may not have been actively investing in the market yet, or may be just getting started on their 401(k) plans. Although millennials have seen what happened to boomers during the Great Recession, many might not be aware that boomers’ retirement plans took hard hits when the markets crashed.
See also: A 4-step investment plan for millennials
Opportunity No. 3: Talk about retirement.
Northwestern Mutual’s study found that more than half of millennials are not talking about retirement with anyone (55 percent). Only 26 percent have spoken about it with a family member and 24 percent with a spouse or partner.
Again, financial advisors came in next to last, with only 11 percent of millennials speaking to one about retirement.
Perhaps the reason that millennials aren’t talking about retirement — despite their interest in and worries about it, as the study shows — is because they don’t grasp the concept of financial planning. They need to see a clear path — think step one, step two, step three — to better comprehend how they can achieve a stable financial future.
Opportunity No. 4: Promote financial literacy and responsibility.
While 64 percent of millennials said they consider themselves to be savers, only 36 percent categorized themselves as spenders. Compared to the general population, 67 percent said they were savers, while 33 percent said they were spenders.
Thirty-six percent of Gen Yers also admitted that they consider their generation to not be financially responsible vs. 17 percent of the general population.
Opportunity No. 5: Talk about being cautiously optimistic.
While 59 percent of millennials agreed that their financial situation is better this year than in 2014 (compared to the 41 percent optimism level of the general population), financial advisors should talk to millennials about being cautiously optimistic with their financial expectations. Being overly confident about their finances was never good for anyone.