Millennials Like Saving Money, Want to Save More

Millennials have impressive financial habits when compared to baby boomers, according to a new Retirement Saving & Spending Study by T. Rower Price. Millennials like to save, with many taking advantage of 401(k) plans while still paying down debt. On average, millennials are saving nearly as much for retirement -- 8 percent of their incomes -- as baby boomers, who are saving an average of 9 percent. And in the past 12 months, millennials are saving a higher percentage of their incomes than baby boomers when it comes to 401(k) contributions.
The research is based on online interviews with 1,505 millennials and 514 baby boomers with 401(k)s, and includes both workers and retirees.
Overall, millennials in the study report they are in surprisingly good financial shape. Eighty-eight percent say they are living within their means and 74 percent are more comfortable saving and investing extra money than spending it. However, many millennials are pessimistic about Social Security: Sixty percent expect Social Security to go bankrupt before they retire.
Here’s what else the survey reveals:
Millennials like to save, and they’d save more if they could.
Saving for retirement and paying down debt are equally important to millennials, who rank both goals as a top priority. For those who say they are not saving enough, 23 percent cited student loans as a major contributing factor.
Related Link: ‘Irresponsible’ Millennials Saving More Than Almost Every Other Group
Millennials like auto-enrollment plans.
Seventy-nine percent of the millennials who were auto-enrolled in 401(k) plans were satisfied with auto-enrollment. When it comes to 401(k) matches, 59 percent of millennials set their 401(k) contribution rate to take full advantage of their employers’ matches.
They’re open to advice and more likely to ask for help if they need it.
If faced with a sudden financial emergency, 55 percent of millennials said they’d seek the help of family and friends, compared to 24 percent of baby boomers. Millennials were also much more likely to admit they could benefit from help with spending and debt management.
They find it hard to save when they make less money.
Non-savers made less money and carried more student debt. The median personal income of non-savers was $28,000, compared to $57,000 for savers. Thirty-nine percent of the non-savers have trouble meeting their monthly expenses.
Men save more.
Millennial women are less likely to save in 401(k)s, even if they are eligible, and when they do, they save less than men. The average 401(k) balance for women participating in their 401(k) is $38,000, compared to an average 401(k) balance of $74,000 for men. Of those who are already participating in 401(k)s, only 41 percent of the savers are women.
Related link: Here Are 7 Ways People Screw Up Their 401(k)s
The High Cost of Child Poverty

Childhood poverty cost $1.03 trillion in 2015, including the loss of economic productivity, increased spending on health care and increased crime rates, according to a recent study in the journal Social Work Research. That annual cost represents about 5.4 percent of U.S. GDP. “It is estimated that for every dollar spent on reducing childhood poverty, the country would save at least $7 with respect to the economic costs of poverty,” says Mark R. Rank, a co-author of the study and professor of social welfare at Washington University in St. Louis. (Futurity)
Do You Know What Your Tax Rate Is?

Complaining about taxes is a favorite American pastime, and the grumbling might reach its annual peak right about now, as tax day approaches. But new research from Michigan State University highlighted by the Money magazine website finds that Americans — or at least Michiganders — dramatically overstate their average tax rate.
In a survey of 978 adults in the Wolverine State, almost 220 people said they didn’t know what percentage of their income went to federal taxes. Of the people who did provide an answer, almost 85 percent overstated their actual rate, sometimes by a large margin. On average, those taxpayers said they pay 25.5 percent of their income in federal taxes. But the study’s authors estimated that their actual average tax rate was just under 14 percent.
The large number of people who didn’t want to venture a guess as to their tax rate and the even larger number who were wildly off both suggest to the researchers “that a very substantial portion of the population is uninformed or misinformed about average federal income-tax rates.”
Why don’t we know what we’re paying?
Part of the answer may be that our tax system is complicated and many of us rely on professionals or specialized software to prepare our filings. Money’s Ian Salisbury notes that taxpayers in the survey who relied on that kind of help tended to be further off in their estimates, after controlling for other factors.
Also, many people likely don’t understand the different types of taxes they pay. While the survey asked specifically about federal taxes, the tax rates people provided more closely matched their total tax rate, including federal, state, local and payroll taxes.
But our politics likely play a role here as well. People who believe that taxes on households like theirs should be lower and those who believe tax dollars are spent ineffectively tended to overstate their tax rates more.
“Since the time of Ronald Reagan, American[s] have been inundated with messages about how high taxes are,” one of the study’s authors told Salisbury. “The notion they are too high has become deeply ingrained.”
Wealthy Investors Are Worried About Washington, and the Debt
A new survey by the Spectrem Group, a market research firm, finds that almost 80 percent of investors with net worth between $100,000 and $25 million (not including their home) say that the U.S. political environment is their biggest concern, followed by government gridlock (76 percent) and the national debt (75 percent).
Trump’s Push to Reverse Parts of $1.3 Trillion Spending Bill May Be DOA
At least two key Republican senators are unlikely to support an effort to roll back parts of the $1.3. trillion spending bill passed by Congress last month, The Washington Post’s Mike DeBonis reported Monday evening. While aides to President Trump are working with House Majority Leader Kevin McCarthy (R-CA) on a package of spending cuts, Sens. Susan Collins (R-ME) and Lisa Murkowski (R-AK) expressed opposition to the idea, meaning a rescission bill might not be able to get a simple majority vote in the Senate. And Roll Call reports that other Republican senators have expressed significant skepticism, too. “It’s going nowhere,” Sen. Lindsey Graham said.
Goldman Sees Profit in the Tax Cuts
David Kostin, chief U.S. equity strategist at Goldman Sachs, said in a note to clients Friday cited by CNBC that companies in the S&P 500 can expect to see a boost in return on equity (ROE) thanks to the tax cuts. Return on equity should hit the highest level since 2007, Kostin said, providing a strong tailwind for stock prices even as uncertainty grows about possible conflicts over trade.
Return on equity, defined as the amount of net income returned as a percentage of shareholders’ equity, rose to 16.3 percent in 2016, and Kostin is forecasting an increase to 17.6 percent in 2018. "The reduction in the corporate tax rate alone will boost ROE by roughly 70 [basis points], outweighing margin pressures from rising labor, commodity, and borrow costs," Kostin wrote.