Numerous surveys confirm that majority of millennials need some guidance from previous generations about money matters. For one, most of them have not saved anything for retirement, are easily scammed, and are saddled with debt.
Data from the National Institute on Retirement Security found that 66 percent of people between the ages of 21 and 32 have no savings for retirement. Last week, the Federal Trade Commission reported that 40 percent of Americans in their 20s became fraud victims in 2017 and lost money.
For the same year, only 18 percent of the victims were aged 70 and above which includes members of the Baby Boom generation. But when it came to dollar value, the loss of millennials averaged $400, while those in the 70s averaged $621 and it further rose to $1,092 for those 80 years old and above, CNBC reported.
Lessons from seniors
CPA Practice Advisor polled seniors to benefit from their experience and hindsight in managing finances. While some of them still become victims of fraud, nevertheless, they could still offer valuable advice to the younger generation how to build wealth.
When asked what their biggest recommendation is for millennials regarding their finances that they wish someone had told them when they were in their 20s, the top response was to learn to save for retirement which was cited by 31 percent of the respondents. Other top answers were to learn how to live within your means (21 percent), learn how to budget (14 percent), and take a job because you enjoy it and not because of the money (7 percent).
But the reality is that a lot of the youth are putting retirement down the goal priority list in favor of paying off student debt or buying homes, Douglas Boneparth, a certified financial planner, said, CNN Money reported. He reminded them that waiting to save significantly delays retirement because they will be missing out on valuable years of compounding returns.
He acknowledged that many of the millennials are not overspending or living a frivolous lifestyle. But many of them still cannot afford to put money toward all their competing priorities. Given that many of them entered the workforce at a time when unemployment was high and wages were low, experts do not expect the millennials to live the same kind of lifestyle in retirement as their grandparents. To supplement their savings, they may have to work longer.
Among the one-third of the 83 million millennials in the US who managed to save some money for retirement, their average account balance is $67,891. For those who could save for retirement, it is because their employers are offering retirement plans like a 401(k). Among those who are eligible for a workplace retirement plan, 94 percent are saving. It is a rate similar to older generations.
However, there are some millennials whose employers offer a 401(k), but they do not meet the eligibility requirements. Some of them may not work enough hours or their employers require them to work for a certain amount of time for them to qualify for retirement packages. Their part-time status has affected the eligibility of 25 percent of millennials to participate in an employer-sponsored retirement plan.
When the seniors were asked how prepared millennials are for retirement compared to their generation, 48 percent said the young people are less prepared, 30 percent said more prepared, and 22 percent said equally prepared.
The top answers of the Baby Boomers when asked about the biggest mistake millennials are making with money today are getting into too much debt (22 percent) and not saving enough for retirement (21 percent). Other replies that ranked high were spending too much money (20 percent) and lack of financial literacy skills (12 percent).
On the other hand, the seniors considered saving money by living with their parents longer is the smartest decision that the millennials are making with money today, cited by 20 percent of the respondents. Other top answers include having fewer children and waiting longer to have children to save money (16 percent), proactively using technology to manage investments (11 percent), and investing in emerging technology (11 percent).
The millennials are also a generous generation, CBS noted. It cited that young shoppers are breathing life into thrift stores not so much by purchasing but more by donating big-ticket items that their parents and grandparents left to them.
Some said they do not find the need for items left by their parents, while others expect to live in smaller accommodations with minimalist styles of décor that they do not have room for all of the stuff from their parents' home.
Expected to benefit from the generosity of millennials are the Salvation Army with better-quality donations and for-profit second-hand shops. These said shops are doing well now while other retailers are struggling, Stephen Viscusi, a business expert, observed. He disclosed that places like Goodwill and Housing Works are enjoying a 20-percent increase in donations because young people see some of the possessions of their parents as junk, and they do not want to inherit them.
[researchpaper 리서치페이퍼=Vittorio Hernandez 기자]