NEW YORK (MainStreet) -- The largest generation of Americans is also looking like one of the most financially savvy -- although they still may not be savvy enough. Millennials, those born between 1978 and 2000, are saving nearly as much as the older Baby Boomers, who are much closer to retirement, according to a new survey from T. Rowe Price. But the survey also found even Millennials best-positioned to save are still putting away only a little more than half as much as experts recommend.

The investment firm surveyed more than 1,500 Millennials who have jobs offering 401(k) savings plans, and compared them to more than 500 Baby Boomers with 401(k)s. These Millennials were particularly well-positioned to save, noted Anne Coveney, senior manager of Retirement Thought Leadership at T. Rowe Price. Respondents reported median personal income of $57,000. By comparison, Bureau of Labor Statistics data indicates median annual earnings of full-time American workers in 2015 is about $42,000.

Even these relatively comfortable Millennials were saving just 8% of earnings for retirement, rather than the recommended 15%. Boomers are saving slightly more than that, Coveney notes, but the average Boomer is also nearly retirement age, while the average Millennial survey respondent was just 27. “I think it’s very promising,” she says of Millennial saving behavior. “They have great awareness of saving and are saving.”

In fact, Millennials specifically identify themselves as savers. “They basically say they’re more comfortable with saving rather than spending,” Coveney says. “88% of them say they’re pretty good at living within their means. In general they’re exhibiting some financial discipline.”

That discipline is probably due in part to the fact that Millennials witnessed the impact of the last financial recession, says Kendrick Wakeman, CEO of Boston financial education company FinMason. Also, Wakeman says, Millennials are the first generation that has the feeling that Social Security may not be around for them when they retire.

In addition to boosting discipline, the Millennials' understanding of financial realities has affected their asset allocation choices, says Wakeman.


“We’ve seen a bunch of Millennials in our system that are very heavily invested in cash, which is more conservative that one would expect for somebody with that time horizon,” he says. In fact, he says, Millennials probably should be more into riskier investments, which according to conventional portfolio theory, will increase long-term returns and improve their retirement financial outlook.

Millennial discipline extends to shopping, according to the T. Rowe Price study, where 63% of Millennials identified with the practice of purchasing only what’s on the shopping list when visiting a store. Most said they were comfortable with budgeting and, when it was necessary to save money, had no trouble cutting out expenses such as travel and dining out.

Somewhat ominously, however, 25% identified with the statement that: “I avoid dealing with my financial situation because it’s out of control.” Student loans were a large contributor to Millennial financial stress, with 23% of respondents citing outstanding educational debt as a major factor in not saving enough.

When it comes to citing financial priorities, T. Rowe Price said Millennials topped the list with two: Paying down debt and saving for retirement. And they backed it up with actions, saying they were both contributing to a 401(k) and paying down debt at the same time. “They’re basically saving in their 401(k)s at about the same rate as they’re paying down debt,” Coveney says. “That’s a good sign.”

Positive signs such as Millennials’ interest in paying down debt are tempered by findings like a survey by the Indexed Annuity Leadership Council that showed slightly more than half of Millennials have less than $5,000 saved for retirement.


Jim Poolman, Bismarck, N.D.-based executive director for the consortium of life insurance companies providing information about the use of indexed annuities, points out that Millennials are just starting their careers, and many have student loans as well as mortgages they are paying off.

Poolman urged Millennials to look beyond just paying off debts. “That should not preclude people in that age group from saving for retirement,” he says. “ The old adage of paying yourself first still is important in this day and age.”