Millennials Are Poised to Create Some Youthful Disruption

They can’t be ignored. Millennials—defined as those between ages 15 and 34—are set to become the largest living generation in the United States, representing one-third of the population. Millennials are projected to number 75.3 million this year, surpassing the projected 74.9 million baby boomers (ages 51 to 69) according to the U.S. Census Bureau. Millennials will be an important engine of the economy for decades to come.


Although marked by transformations at nearly every important milestone, in many cases, millennials are simply following the patterns of change set by previous generations. They are focused on financing college and graduate school education; managing loan and credit needs, including paying off debt; marriage and starting families; buying homes and cars; financing their children’s education; paying for health care; and getting an early start on saving for future expenses and retirement.

Getting a Head Start on Retirement Savings

Millennials are at the prime age to employ early-saving strategies, even though stashing away money for something so far into the future is tough for them. Research by Prudential shows that a secure retirement is attainable with consistent 401(k) saving, such as committing to automatic escalation of contributions, saving at a rate that maximizes the employer match, and combining those funds with Social Security payments.

To their credit, about 67 percent of millennials have begun saving for retirement, according to a survey from the Transamerica Center for Retirement Studies. The youngest workers surveyed had a median of $16,000 in total retirement savings, compared with $45,000 for workers in their 30s. And 28 percent of those in their 20s were stashing away more than 10 percent of their salaries in 401(k) or similar plans.

However, nearly 20 percent of those in their 20s who are saving said they knew “nothing” about how they should invest and allocate their assets, and about 27 percent said they weren’t sure how their savings were being invested.


Additionally, like Gen Xers, millennials say they aren’t relying on Social Security to fund the bulk of their retirement. About 81 percent said they are concerned that Social Security won’t be there to help them when they retire, the survey showed.


Face-to- Face With the Future You

As we all know, the temptation to spend and a need for instant gratification are ever-present. But what if you could see the future you? Would that help you to show a little restraint so you could can enjoy much greater rewards in the future?


Millennials are 33 percent more likely to cite a big life change such as getting married or having children as motivation to improve their finances through saving and investing, according to a report from Bank of America Merrill Lynch.

While individuals who see retirement on the horizon are 41 percent more likely to improve their finances, millennials are only 4 percent more likely to do so. Now is a good time to begin thinking about the future you.


Debt Is in the Details

Millennials also need to overcome their crushing debt balance. Total student outstanding loan debt surpassed $1 trillion at the end of the second quarter of 2014, making it the second largest category of household debt, according to the Council of Economic Advisers (CEA), an agency within the executive office of the White House.


Average student-borrower debt increased from $24,000 in 2004 to $30,000 in 2012, and is still climbing. Some students pursuing graduate degrees have debt totals of $50,000 to $100,000. In part, this increase in student debt is due to greater enrollment among millennials and to the changing profile of students, including a larger share of students from lower-income families who need to take out more loans, the CEA report showed.


Just the Beginning

An opportunity exists for millennials to learn more about saving and investment opportunities. A good place to start is Prudential’s Uncover Investment Opportunities that Match Your Goals. Even though some individuals are already saving for retirement, some millennials, because they are just getting started on their working lives, view retirement as far away and saving for retirement as less of an urgent matter.


However, while millennials face substantial challenges, they are also well equipped to overcome them. Remember, they are highly skilled in technology, diverse and better educated than any previous generation, according to the CEA. Millennials are still in the early stages of joining and participating in the labor market, and they have the potential to make an impact on the U.S. economy for decades.

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