The Millennials' financial story is leading to a plot twist in the near future.
Since the recession, the main economic plot points for those ages 18 to 34 included crippling student loan debt (it still does), a dearth of jobs and an arrested financial development (only partially true). However, according to the Deloitte Center for Financial Services, that's going to change dramatically within the next 15 years.
“All that said, I don’t recommend taking your eye off the ball on this new generation of investors, as Gen X and Millennials will make up half of wealth in 2030,” said Gauthier Vincent, a principal with Deloitte Consulting LLP and the leader of Deloitte’s wealth management practice.
Why is that? Well, as job reference firm Allison and Taylor points out, the generation born after 1995 will be entering the workforce this year just as 3 million Baby Boomers are set to retire. That opens the door for Millennials to take those vacated management positions. That, in turn, should jumpstart savings that Millennials have only just started considering.
In a recent survey of Millennial workers by The Principal, 63% report they started saving for retirement before age 25. However, less than a third are saving at least 10% of their salary through their employer-sponsored retirement plan.
“It’s great to see young savers getting started early,” said Jerry Patterson, senior vice president of retirement and investor services at The Principal. “But just as important as saving early is saving enough. Our analysis over the years has found that saving 10% of your salary, plus any employer match, over the course of a working career is the key to achieving a more secure retirement.”
Still, Millennials have been trying to make savings a part of their routine even during tough stretches. Roughly 66% of Millennials have established a monthly budget and 35% use a digital-budgeting system. More than half (57%) of Millennials have an emergency savings fund, but less than one-third (32%) believe their fund could cover basic monthly expenses for more than six months. When asked at what age a young adult should be financially independent, 84% of Millennials responded by age 25 or younger. And six of ten Millennials expect to be better off financially than their parents.