Millennials took one look at their financial future and realized early on that it was bleak.
The YOLO generation started saving for retirement — cramming money into 401(k) accounts — nine years earlier than their baby boomer parents, according to a new study.
Charles Schwab Corp’s Retirement Reimagined study points to the lack of pension plans, through which companies would provide for workers until retirement, as a factor prompting millennials to start saving for retirement themselves.
Millennials, who are worse off financially than their parents in many ways, are also less likely to own their own home, an inherent source of retirement savings for boomers.
Despite their efforts to put money aside early, many millennials fear they won’t really be able to retire, and their idea of what retirement means is also very different from boomers’.
“Millennial retirees spend 24% less time on financial matters than boomers and use their savings to pursue their desired lifestyles and passions,” says the report, which surveyed 5,000 Americans and used predictive analytics to analyze outcomes and attitudes for the Predict retirement per generation.
Lately, millennials are saying they’ve taken a break to put money aside. Almost half of 18- to 35-year-olds are waiting “for things to get back to normal,” according to a survey conducted by Fidelity Investments earlier this year.
Many younger workers are likely to save for retirement earlier than Boomers simply because they are automatically enrolled in their company’s 401(k) plan, rather than having to opt into such plans as Boomers had to. More company pension plans are also adding automatic escalation clauses, where participants’ contributions as a percentage of their pre-tax paycheck are automatically increased by 1% per year.
Schwab’s study predicts that millennial retirees are more than 150% more likely to invest in crypto and digital assets in retirement than boomers. That aligns with a finding from an Investopedia study on financial literacy released earlier this month. This survey of 4,000 Americans found that 28% of millennials plan to use crypto to support themselves financially in retirement.
“The good news is that Millennials have more time before retirement to take risks,” said Rob Williams, managing director of financial planning, retirement income and wealth management at Charles Schwab Corp US and global economy through traditional stocks – things that have cash flows and generate growth – and right now crypto doesn’t qualify for that.”