Millennials Outperform Everyone in Saving, but It’s Not for What You’d Think
The Traditional Idea of Retirement Is Officially Extinct; Merrill Edge® Report Finds Change in How Younger
Generations View Life Milestones and Approach Finances, Career and Family
Millennials are charting unexplored territory as the first generation to plan for financial freedom instead of retirement,
according to the latest Merrill Edge® Report. Sixty-three percent of millennials are looking to achieve the amount of savings or income
necessary to live their desired lifestyle, which drastically differs from most (55 percent) Gen Xers and baby boomers who are
saving to leave the workforce.
The survey of more than 1,000 mass affluent Americans1, conducted between March 21 and April 5, outlines a change in
how younger generations define life milestones and what it means to be an adult. When asked about their top priorities in life,
millennials were significantly more likely than their older counterparts to focus on personal milestones of working at their dream
job (42 percent, compared to 23 percent) and traveling the world (37 percent, compared to 21 percent). Today’s 18- to 34-year-olds
are also far less likely to prioritize traditional life milestones, including being married (43 percent, compared to 51 percent)
and being a parent (36 percent, compared to 59 percent).
“This spring’s report shows us even more differences between how millennials and their parents view and save for the future,”
said Aron Levine, head of Merrill Edge. “Young adults tell us they are willing to do whatever it takes to achieve freedom and
flexibility, even if it means working for the rest of their lives. To ensure success, it’s increasingly important these younger
generations take a hands-on, goals-based approach to their long-term finances and prioritize saving in the short term.”
Millennials’ “fear of missing out” (FOMO) philosophy is also evident in their spending habits, as the majority say they’re more
likely to spend money on traveling (81 percent), dining out (65 percent) and exercising (55 percent) than saving for their
financial future.
Savings perceptions versus realties
Although 45 percent of millennials consult their parents “always” or “often” for advice on financial matters, perhaps parents
should be consulting their children. The report found every generation views their elders as superior savers – 54 percent of
respondents say the Greatest Generation does a “very good” job, followed by baby boomers at 45 percent, Gen Xers at 19 percent and
millennials at only 8 percent, including only 15 percent of millennials themselves.
However, when asked how much of their income they save annually, millennials say they save 36 percent more than their
generational counterparts, with over one-third of millennials putting more than 20 percent of their salary toward savings
goals.
Overall, 42 percent of respondents are saving less than 10 percent of their salary, and 7 percent don’t save at all. This
broader savings gap may be the reason why respondents don’t feel prepared for life’s “what-if” scenarios:
- Seventy-one percent are not very confident they could achieve their financial goals if they were to
get divorced, with just 5 percent planning for the possibility.
- Sixty-four percent say they are not very confident they could be financially successful if they had
children, with just 23 percent saving for a family.
- Forty-eight percent are not very confident they could achieve their goals if they outlived their
significant other.
Americans agree they could do a better job to prepare for life’s surprises. Fifty-nine percent believe individuals in the U.S.
should be required to save for their own retirement, and 48 percent feel financial education should be a requirement.
The future of investing
Innovations in technology have a significant influence on the future of saving, as many Americans increasingly embrace recent
industry advancements to make investment decisions and receive guidance.
Two in five Americans say they make and manage their investments through an online or mobile portal. One in eight Americans are
currently using a robo advisor or would consider doing so in the next year, and this number jumps to 22 percent among millennials.
Overall, respondents cite this ability to invest via mobile makes them feel knowledgeable (51 percent), empowered (31 percent) and
savvy (14 percent).
When asked about predictions for the next decade of investing, Americans believe emerging technologies will allow more people to
invest (41 percent), most investments will be automated (34 percent), and the 401(k) account will no longer be the “gold standard”
(29 percent).
“We’re at a pivotal moment in time, when our physical and digital worlds are intersecting more than they ever have before,” said
Levine. “This growing shift is driving our high-tech and high-touch approach to innovation, and the beauty is that consumers are
recognizing that planning for their later years is not a one-size-fits-all process. With new technologies, customers have the
flexibility to be hands-on with their investment decisions, while still consulting an advisor to help navigate complexities as
their lives change.”
For more in-depth information about the financial behaviors and priorities of mass affluent Americans, read the entire Spring
2017 Merrill Edge Report here. A complementing infographic is available here.
1 Merrill Edge Survey Methodology
Convergys (an independent market research company) conducted a nationally representative, panel sample online survey on behalf of
Merrill Edge March 21-April 5, 2017. The survey consisted of 1,023 mass affluent respondents throughout the U.S. Respondents in the
study were defined as aged 18 to 34 (millennials) with investable assets between $50,000 and $250,000 or those aged 18 to 34 who
have investable assets between $20,000 and $50,000 with an annual income of at least $50,000; or aged 35-plus with investable
assets between $50,000 and $250,000. For this purpose, investable assets consist of the value of all cash, savings, mutual funds,
CDs, IRAs, stocks, bonds and all other types of investments excluding primary home and other real estate investments. We
conducted an oversampling of 300 mass affluents in the following markets: Los Angeles, Dallas, South Florida, Chicago,
Atlanta, and Phoenix. The margin of error is +/- 3.1 percent for the national sample and about +/- 5.6 percent for the oversample
markets, all reported at a 95 percent confidence level.
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