Recent research by Edward Jones cast a spotlight on the financial vulnerabilities millennials face. The survey, targeting financial advisers, reveals that 43% view millennials as the most susceptible to financial difficulties, surpassing Gen Z, Gen X and baby boomers.
This generational financial precariousness isn't unfounded. Millennials grew up and entered the workforce during tumultuous economic times - from the aftermath of the Great Recession to the recent impacts of the COVID-19 pandemic. These events have shaped their financial perspectives as well as their saving and spending habits.
The survey also challenges some stereotypes about millennials. Edward Jones's research indicates that this generation is the most educated in history, with significant portions holding college degrees. However, they face unique challenges like rising costs and difficulty saving, which significantly impact their financial planning and stability.
Millennials' diverse needs and nontraditional career paths, often involving gig work and job transitions, require a different approach to financial planning. While they are comfortable with digital platforms, 66% of millennials prefer in-person interactions with financial advisers, indicating a blend of traditional and modern approaches in their financial dealings.
A National Institute on Retirement Security study revealed that two-thirds (66.2%) of working millennials have no retirement savings. This issue is more pronounced among millennial Latinos, with 83% having no retirement savings. The study also noted that only 5% of working millennials are saving adequately for retirement based on financial expert recommendations. Factors such as employer eligibility requirements are significant barriers, preventing about 45% of working millennials from participating in employer-sponsored retirement plans.
The Goldman Sachs Retirement Survey & Insights Report, based on responses from 1,566 individuals collected between July and August 2022, sheds light on millennials' retirement preparedness. While a majority of working respondents (95%) acknowledge the importance of financial help in preparing for retirement, 34% feel they are behind in their retirement savings.
This sentiment among millennials highlights a growing concern about their financial readiness for retirement. Despite recognizing the need for financial guidance, a significant portion of this generation perceives a gap in their retirement planning.
These reports emphasize the major importance of financial planning. Strategies like life insurance, emergency savings and retirement planning can be pivotal. Approximately 64% of advisers stressed life insurance, while 58% recommended cash or emergency savings and 43% pointed to the importance of retirement savings.
Financial advisers can tailor strategies to individual needs, helping all generations navigate financial uncertainties to achieve stability and confidence.
Here are some financial tips:
Build an emergency fund: Aim to save enough to cover three to six months of living expenses. This acts as a buffer against unexpected financial shocks.
Effective debt management: Prioritize paying off high-interest debts and consider refinancing or debt consolidation options.
Retirement savings: Start early with retirement planning, even with modest amounts. Use employer-sponsored retirement plans and individual retirement accounts (IRAs) for long-term growth.
Invest in insurance: Life and health insurance are essential to protect against unforeseen events and healthcare costs.
Diversify investments: Balance your portfolio with a mix of stocks, bonds and other assets to spread risk.
Regular financial reviews: Periodically assess your financial plan with a professional adviser to ensure it aligns with your changing life goals and circumstances.
Continual learning: Stay informed about financial markets and personal finance to make educated decisions about your money.