"They're quite aware of what they're going through."
Take, for example, the issue of saving for retirement. If the older generations have an image of Millennials - the generation now between ages 16 and 36, and numbering more than 75 million - as flighty and irresponsible with their financial strategy, the raw numbers tell a different story.
According to the
Perhaps more strikingly, 40% of Millennials actually increased their contribution to a 401(k) or similar plan in the prior 12 months, compared to 30% of Gen-Xers.
The numbers don't surprise
Quite aware, indeed.
A keen interest in retirement savings, Matty said, "goes hand in hand with the anxiety about not having a pension or the
"The job market is terrible," she said. "They've got crazy educational costs; they're coming out of college with more debt than ever. It's like a mortgage. And that puts more pressure on them to wait on housing. I feel bad for them."
Deliso also noted the issue of
"They say, 'I need to think more about myself because
To help answer that question, several investment experts spoke with Business West about what a 20and 30-somethings should be considering as they ponder a retirement that isn't as far away as it may seem.
Matty's simplest advice is to save as much as possible. But that takes discipline, and is easier said than done.
The stock market may be prone to short-term volatility, she said, but young people can feel confident of the longer-term view when considering whether to invest.
"The other thing would just be contributing to whatever plan you have at work," she said. "We don't usually have pension plans available to us, so if you can do anything in your workplace to contribute to a plan, that's important to establishing that savings habit. If you have a habit in place, it's a lot ç|sier to continue doing it."
One benefit of automatic deductions is psychological, she noted. "If you don't see it, you can't touch it. Then, you can look at what you need to pay your debts. After that, work on what else you can safely put away, and make a budget for what you can spend. Luxuries are great, but that's what they are, luxuries; they're not necessities."
Deliso said any financial plan for young people - or anyone, really - begins with one basic step: "pay yourself first." In other words, savings should be the first expense to come out of one's earnings.
"Get into an employer-sponsored plan as soon as possible," she said, "and if there's a match, get that match, so you're not losing free money." Another option would be to open an IRA, preferably with a Roth component ensuring that withdrawals later in life aren't taxed.
Millennials understand the importance of these vehicles; according to the Transamerica Center survey, 55% of them expect such self-funded accounts to be their primary source of retirement income, and 75% would like more information from their employers on how to achieve their retirement goals.
Deliso noted that people don't keep one job anymore, but may hold seven, 10, or even more over a lifetime, and it's important to keep rolling employersponsored plans into new plans as they change jobs.
The next step, after contributing to retirement savings, is to determine what bills must be paid each month and what expenses can be trimmed, and that takes budgeting and self-control, she went on. "The bottom line, and the most important thing for Milliennials or anyone else, is to live within your means. Don't take an apartment that takes 75% of your income. You want to have positive cash flow, because that allows you to have savings, and that brings financial success."
Positive cash flow can begin with the simplest of steps, Deliso added, such as not spending
It shouldn't be a hard sell, said
A starting point, she noted, addresses how saving and planning begins with a budget and eliminating debt. Then, moving forward, they can address midand long-term goals.
"Since most Millennials came of age or began their careers at the time of the Great Recession," Kane added, "they tend to be more financially riskaverse than previous generations and are very connected to the idea of planning as a means to manage risk."
The debt issue is a key one, she added. According to
Running Out of Time
To be sure, retirement savings are not a Millennial issue; they're a problem for everyone. And 'problem' is the right word. According to a recent
"Moreso than prior generations, Millennials experience more pressure to save," Matty said. "Obviously, corporate pension plans don't exist anymore, and there are questions as to whether
But Millennials were also jolted by the crash of 2008, which occurred, for many of them, during their teen years. It was sobering for them, even though they weren't yet in the work world, and established a foundation of mistrust in the entire economic system.
As a result, she said, Millennials are more likely than past generations to continue living at home into their mid- to late 20s - not because they're lazy, but because they want to build a base of savings instead of piling more debt on top of their exorbitant college loans.
"It's an interesting change," Matty said. "Millennials get a bad reputation for being slackers, for not particularly having a good work ethic. But they came out of college into a weak job market, and they understand the importance of establishing savings, or at least working toward that goal."
According to the Transamerica Center report, 22% of Millennials say they "frequendy" discuss saving and planning for retirement with family and friends, compared with just 10% of Generation X and Baby Boomers - a counterintuitive statistic, to be sure. Indeed, starting the conversation too late has put many a 40-something worker - by now dealing with mortgages and college expenses for their own children - well behind the savings they need to achieve.
In this new world, Matty said, there's no replacement for making - and sticking to - a plan.
"People don't necessarily have the same career for 40 years anymore, and they don't have the same pension they once had," she reiterated. "In your mid-20s, you have 40 to 50 years to retirement. Start planning while time is on your side." ?