A new survey from Truist, formerly SunTrust, finds that a majority of millennials who have a financial plan expect to reach their financial goals in the near term even though many are burdened by debt and lack retirement funds.
Eighty-six percent of millennials in the study said they had established personal financial goals for the next five years. At the same time, 69% reported that they had not created an emergency fund and 68% did not have a non-retirement savings account.
As the oldest millennials turn 40 this year, many members of this generation are pursuing life milestones different from their parents’. According to the survey, the top three goals for those with a financial plan:
- Debt repayment – 57%
- Travel – 48%
- Increasing the amount they save for retirement – 45%
These priorities outpace milestones such as homeownership, cited by 40%, and starting or expanding a family, cited by 30%.
“Long-term financial success is often the cumulative effect of many successful short-term goals and habits,” Joseph Sicchitano, head of wealth planning and advice delivery for Truist, said in a statement.
“It is encouraging that most millennials have identified financial goals, but achieving a goal requires a sustained commitment. Focusing on a short-term goal, like creating an emergency fund to cover unexpected expenses, can keep you on track to reaching your long-term aspirations.”
Wakefield Research conducted the study between Nov. 26. and Dec. 5 among 1,000 U.S. adults ages 23 to 39, using an email invitation and an online survey.
Eighty percent of millennials in the study said they planned to retire, among whom 75% said they would rely on personal or retirement savings, 60% on Social Security and 25% on an inheritance.
Only 40% of those who planned to retire reported that they had a retirement account.
Some millennials who had not started saving for retirement said they were relying on prior generations to help fund their retirement. Forty-six percent had received or expected to receive an inheritance, and 44% of these planned to use it to help fund their retirement.
“Even though more than half of millennials have not started saving for retirement, most are confident that they will retire,” Sicchitano said. “The defined-benefit plans their parents may have had are rare today, so millennials need to take control of their retirement savings.”
While some may rely on an inheritance, others may retire from a career, but continue work that provides personal fulfillment and income, he said. “With decades before they will retire, millennials still have time to create a plan for the retirement that reflects and is designed by them.”
The Role of Advice
The Truist study found that 41% of millennials who lacked a financial plan did not know where to start, and 31% did not know whom to trust.
Those millennials who said they did get financial advice often turned to someone they knew: 42% to their parents, 40% to a significant other and 32% to a friend.
And while 35% said they sought financial advice from a professional, such as a banker or accountant, only 16% reported working with a financial advisor.
“Millennials prefer to look to someone they know for advice, even if they do not have the expertise of a financial advisor,” Sicchitano said. “Seeking advice is a positive step, but remember — no two financial plans are the same.
“The plan you create and the decisions you make need to be based on your goals, not the goals of your parents or friends. Identifying what you want to achieve is the first step in any discussion about your finances.”
— Check out Top 12 Cities for Millennial Homebuyers on ThinkAdvisor.