Millennials Crushed Negative Financial Stereotypes During the Pandemic, According to New Study
Millennials are beating the stereotypes about living large and being careless spenders. Having been through a recession and a pandemic, a new study finds that millennials are not only proactive about their finances but also optimistic about their financial outlook.
The Advisor Authority study, by Nationwide Retirement Institute, found that millennials–those aged 26 to 41–are applying what they’ve learned after living through past financial crises. Indeed, 33% say that the pandemic had a profound impact on them, and 23% say that the 2008 financial crisis affected them. In turn, these events have made them more cautious, proactive and confident in the way they face the future.
The study found that while millennials are more concerned about a U.S. economic recession-with 79% compared to 71% of Generation X and 63% of baby boomers-they are more confident than older generations in their ability to protect their finances and investments in the event of another crisis. Indeed, 56% of them have that sentiment, compared to 43% of Gen Xers and 33% of baby boomers.
“Compared to other generations, millennials have lived through more formative events, including three significant financial crises, in a short time span. Those disruptions have increased their awareness of the importance of planning for the unexpected and taking ownership of their financial futures,” Kristi Martin Rodriguez, leader of the Nationwide Retirement Institute, said in a press release. “Our data shows the old stereotypes are either untrue or out of date. Millennial investors are focused on taking steps to achieve financial stability now while preparing for unforeseen events on their way to a secure retirement.”
In terms of the steps they took to adopt healthy financial planning habits in the wake of recent financial crises, 83% of them put risk-protection strategies in place, 31% established and follow a budget, and 28% started an emergency fund.
They are also proactively planning for retirement and 60% of them say they are confident in their ability to prepare for and live in retirement, while 78% have a strategy in place to protect against outliving their savings. In addition, 66% say they are currently working with a financial professional or advisor.
Strategies they use include leveraging Social Security, with 47%, in-plan income guarantees, with 38%, dividend-yielding stocks with 31%, and longevity insurance/deferred income annuities with 31%, the study found.
“Millennials are experiencing a financial awakening and it is so important that advisors and financial professionals start preparing to serve their unique needs,” Rodriguez said. “Those who can establish long-term relationships with Millennial clients have a tremendous opportunity to grow their practices and help the next generation prepare for a secure retirement.”
Finally, the study found that Millennials’ financial outlook for the next year grew more optimistic to 54% in 2021 from 38% in 2020, exceeding Generation X (49% from 40%) and Baby Boomers (45% from 33%).
More From GOBankingRates