A new study from D.A. Davidson of over 1,000 affluent American adults uncovered that three-quarters of respondents started saving at age 35 or younger, including 95% of Millennials.
Despite starting to save at a young age, 36% of Millennials expect to carry debt into retirement. This might be because 61% of Millennials think they will support an adult child financially and 66% believe they will be supporting an aging parent.
“Millennials know what the worst-case scenario is because they grew up in it,” said Andrew Crowell, vice chairman of wealth management at D.A. Davidson. “They have seen the impact that the last recession and the subsequent debt has had on their family’s lives and retirement goals. It’s clear that they are looking for ways to pay it back to their parents while limiting the impact that debt can have on the next generation.”
Key finding one: Are Millennials Realistic or Pessimistic?
Seventy-five percent of affluent Americans started saving by the age of 35, but more than one third of Millennials expect they will carry debt into retirement
- Three-quarters of respondents started saving at age 35 or younger. In fact, the majority (46%) started saving between the ages of 22 – 35
- Twenty-one percent of Millennials are already saving for their children’s college education
- Further, while 72% of respondents anticipate not supporting an adult child financially and over three-quarters (76%) are not/do not plan to support an aging parent financially; 61% of Millennials think they will support an adult child and 66% think they will support an aging parent
- Even with a savings plan in place, more than one third of Millennials (36%) expect to carry debt into retirement. However, 32% of retired Gen X and Baby Boomers had to pay off lingering debt during retirement
- Additionally, 38% of Millennials plan to start a new business in retirement
Key finding two: The Role of the Modern Day Financial Advisor
Affluent Americans are still looking for the human touch when it comes to managing their money, with fewer than five percent of respondents entrusting the bulk of their investments to a robo-advisor
- Even as Millennials continue to embrace technology, 52% still entrust the bulk of their investments to a traditional financial advisor
- While only eight percent of Millennials use a robo-advisor, this is still nearly three times as many compared to three percent of Gen X and even more compared to the one percent of Baby Boomers using a robo-advisor
- More than half (59%) of respondents entrust the bulk of their investments to a traditional financial advisor
- Forty percent of respondents know their financial advisor’s phone number off the top of their head while two-thirds of respondents (66%) know their investment accounts’ login information
Key finding three: Financial Plans: A Generational Divide
Nearly half of affluent Americans do not have a formal, written long-term financial plan; however, 78% of those that do have a plan, review it on an annual basis
- Nearly half (47%) of respondents do not have a formal, written long-term financial plan; including 55% of Baby Boomers
- However, almost three-quarters (74%) of Millennials do have a formal plan
- Seventy-eight percent of respondents with a formal plan review it on an annual basis and 18% review their plan every 5 years
- Baby Boomers are most likely to review their financial plan on an annual basis (83%); compared to 71% of Millennials
This survey was conducted online among a sample of 1,001 adults with at least $250,000 in investable assets, excluding workplace retirement accounts, such as a 401(k), or the value of a primary residence. The survey was administered between May 28 and June 5, 2019, by Engine’s Online CARAVAN.
About D.A. Davidson Companies
D.A. Davidson Companies is an employee-owned financial services firm offering a range of financial services and advice to individuals, corporations, institutions and municipalities nationwide. Founded in 1935 and headquartered in Montana, with corporate offices in Denver, Los Angeles, Portland and Seattle, the company has approximately 1,400 employees and offices in 25 states.
Subsidiaries include: D.A. Davidson & Co., the largest full-service investment firm headquartered in the Northwest, providing wealth management, investment banking, equity and fixed income capital markets services and advice; Davidson Investment Advisors, a professional asset management firm; D.A. Davidson Trust Company, a trust and wealth management company; Davidson Fixed Income Management, a registered investment adviser providing fixed income portfolio and advisory services; and Wells Nelson, a broker dealer offering public finance and wealth management services.