“Many…young investors are focusing on their retirement goals by saving earlier and planning now for the lifestyle they want to live during their retirement years."
The rap against Millennials is that as a generation, they feel “entitled,” but a Bank of America Merrill Edge Report released Monday finds that they are not taking their financial futures for granted, and are taking proactive steps to ensure retirement readiness.
“Many…young investors are focusing on their retirement goals by saving earlier and planning now for the lifestyle they want to live during their retirement years,” noted Alok Prasad, head of Merrill Edge, in a statement. “As markets continue to improve and (Millennials) invest optimistically for the future they will seek tools and guidance that help them best pursue their long-term retirement goals.”
Almost half (42 percent) of Millennials, the study found, are not just saving aggressively for retirement, they are also saving earlier than previous generations, including baby boomers. Millennials, the study found, started saving for retirement, on average, at the age of 22, while boomers started saving on average at the age of 33. This may account for why nearly three-fourths (72 percent) of Millennials believe they are on track to maintain their desired lifestyle into retirement, compared to just half of the Generation X and boomer counterparts ages 35-50.
Millennial respondents report having current retirement savings of $55,000, compared with the national average of $121,000. They are wary of Social Security’s viability. About half (49 percent) will rely more on programs such as Social Security and Medicare to partially fund their retirement.
Rocked by the recession, Millennials are taking decisive financial actions to help ensure that their optimistic forecasts come true. More than three-fourths (77 percent) plan this year to grow their retirement nest egg, while 44 percent—the highest percentage of respondents—are contributing more to their children’s college savings.
Forty-five percent are “significantly” paying down large debts, while 57 percent plan to invest more in the stock market.
Mass Affluent Millennials (with a net worth between $100,000 and $1 million, not including primary residence) surveyed for a first quarter Millionaire Corner wealth level study, reported similar retirement concerns. Sixty-one percent of the youngest investors surveyed said they are concerned about being able to retire as planned, while a greater percentage than their older cohorts said they were concerned about getting adequate help and advice to allow them to reach their financial goals.
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Meanwhile, they are similarly confident about their present and future financial situations. Fifty-seven percent—the highest percentage across all age levels—said they are better off now than they were a year ago, while 67 percent expect to be doing even better one year from now.
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Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.