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
Coming Soon: Deductible Relief Day!
You may be familiar with the concept of Tax Freedom Day – the date on which you have earned enough to pay all of your taxes for the year. Focusing on a different kind of financial burden, analysts at the Kaiser Family Foundation have created Deductible Relief Day – the date on which people in employer-sponsored insurance plans have spent enough on health care to meet the average annual deductible.
Average deductibles have more than tripled over the last decade, forcing people to spend more out of pocket each year. As a result, Deductible Relief Day is “getting later and later in the year,” Kaiser’s Larry Levitt said in a tweet Thursday.
Chart of the Day: Families Still Struggling
Ten years into what will soon be the longest economic expansion in U.S. history, 40% of families say they are still struggling, according to a new report from the Urban Institute. “Nearly 4 in 10 nonelderly adults reported that in 2018, their families experienced material hardship—defined as trouble paying or being unable to pay for housing, utilities, food, or medical care at some point during the year—which was not significantly different from the share reporting these difficulties for the previous year,” the report says. “Among adults in families with incomes below twice the federal poverty level (FPL), over 60 percent reported at least one type of material hardship in 2018.”
Chart of the Day: Pragmatism on a Public Option
A recent Morning Consult poll 3,073 U.S. adults who say they support Medicare for All shows that they are just as likely to back a public option that would allow Americans to buy into Medicare or Medicaid without eliminating private health insurance. “The data suggests that, in spite of the fervor for expanding health coverage, a majority of Medicare for All supporters, like all Americans, are leaning into their pragmatism in response to the current political climate — one which has left many skeptical that Capitol Hill can jolt into action on an ambitious proposal like Medicare for All quickly enough to wrangle the soaring costs of health care,” Morning Consult said.
Chart of the Day: The Explosive Growth of the EITC
The Earned Income Tax Credit, a refundable tax credit for low- to moderate-income workers, was established in 1975, with nominal claims of about $1.2 billion ($5.6 billion in 2016 dollars) in its first year. According to the Tax Policy Center, by 2016 “the total was $66.7 billion, almost 12 times larger in real terms.”
Chart of the Day: The Big Picture on Health Care Costs
“The health care services that rack up the highest out-of-pocket costs for patients aren't the same ones that cost the most to the health care system overall,” says Axios’s Caitlin Owens. That may distort our view of how the system works and how best to fix it. For example, Americans spend more out-of-pocket on dental services ($53 billion) than they do on hospital care ($34 billion), but the latter is a much larger part of national health care spending as a whole.
