Millennials make up the largest living generation in the U.S. with 79.8 million members in 2016, according to the Pew Research Center. Despite strong stereotypes that claim millennials face some money issues, members of the millennial generation plan on moving out on their own to invest in homes, businesses, retirement savings plans and portfolios to bankroll their retirements, according to a survey from Natixis Investment Managers.
Natixis surveyed 8,300 investors around the world with a minimum of $100,000 in investable assets in February and March of 2017 about their views on the markets, investing and measuring progress toward financial goals. The online survey results included responses from 2,434 millennials ages 21 to 36.
Learn exactly what millennials expect to get out of their investments, and how to go from millennial to millionaire.
Millennials are twice as likely as baby boomers to expect an inheritance.
According to research from Natixis, 62 percent of millennials expect an inheritance from parents or grandparents to help fund their retirements, compared with 31 percent of baby boomers. But millennials may be counting some of their nest eggs before they’re hatched. Although nearly seven in 10 millennials say they anticipate an inheritance, four in 10 boomers don’t plan on leaving one. These boomers either expect to have nothing left or use their savings on themselves.
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Millennials expect a helping hand from their kids during retirement.
Nearly half of American millennials — 47 percent compared with 24 percent of boomers — expect family assistance in the form of housing, cash or other aid to be an important part of their financial plans for retirement.
Millennials expect to cash in on the sale of their homes and/or business.
Natixis found 60 percent of millennials in the U.S. anticipate proceeds from the sale of their homes, businesses or both will give them a firm foundation for retirement. And the generation seems to be off to a solid start toward making that happen. A study of millennials from survey firm Qualtrics in 2017 found 53 percent already own homes, though other studies put that number in the 30 percent range.
Many millennials aren’t counting on Social Security.
The Natixis survey found that just 35 percent of this generation are banking on Social Security payments to be a very important part of their retirement income, while 41 percent don’t expect any Social Security for millennials.
Millennials expect to retire young.
Millennials say they plan to punch out for the last time at age 59, on average — a full half-dozen years earlier than baby boomers expect to retire. That might be another reason many millennials aren’t planning to rely heavily on Social Security, because the retirement age to receive full retirement benefits through the system is currently set at 67 for everyone born after 1959.
Most millennials are planning ahead.
The survey found that 59 percent of American millennials already have a formal financial plan to help reach their retirement savings goals, putting them just ahead of the 56 percent of baby boomers who have done the same.
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Most millennials have a ballpark figure for retirement savings.
Many millennials have set short- and long-term savings goals, with 71 percent of survey respondents in the U.S. saying they have a general figure in mind of how much money they need to have saved by the time they retire. And 54 percent even have a clear idea of how much they need to save each year to meet that goal.
The majority of millennials are getting help from a financial pro.
Natixis found that 78 percent of American millennials are getting professional financial advice compared with only 55 percent of baby boomers. Experts say many millennials are also comfortable getting that guidance from robo-investment advisors. At the same time, millennials want the option of working with a live advisor and also using self-service applications on their laptops, tablets and smartphones. There are lots of great apps for first-time investors to use.
Millennials might not be putting enough aside for retirement.
Americans in this generation expect to live for 25 years after retirement. That puts them at age 84 based on the fact that they plan to call it quits at 59 on average. They are setting their savings rates accordingly. However, many millennials retiring can count on living much longer, according to calculations from the Social Security Administration. There’s no question the cost to live to 100 is high.
Most millennials aren’t accounting for inflation.
Natixis found that only 17 percent of U.S. millennials surveyed said they factored inflation into their retirement savings plans. And while the annual inflation rate has been low of late, it climbed as high as 13.5 percent in the oldest millennials’ lifetimes. So it would be wise to count on at least some rising prices in retirement.
U.S. millennials are saving less of their salary than their global peers.
American millennials are putting aside 8.8 percent of their annual incomes for retirement, on average. That compares with 9.1 percent for Canadians and an impressive 14.8 percent for Taiwanese of the same age.
Millennials are more financially conservative than some might think.
Investors in this age group often grapple with the level of risk they’re willing to take on in order to reap healthy returns. This caution might be driven by the fact that only 64 percent of millennials around the world say they feel financially secure compared with 70 percent of baby boomers.
Many millennials don’t have a retirement budget in mind.
Millennials might have a big-picture savings goal, but fewer have worked out the daily details of retirement. The Natixis global survey found that just 64 percent of millennials have estimated what they’ll need for retirement income and just 58 percent have taken the step of estimating what their expenses will be in retirement. A GOBankingRates survey found that 39 percent of people it surveyed didn’t know how they were going to pay for retirement.
Millennials don’t believe everything they read.
Only 39 percent of millennials in the global survey said they trust social networks such as Twitter or Yahoo Finance when it comes to informing their financial decisions, while 58 percent said they trust the financial media. That compares with 87 percent who said they trust their own judgment and 86 percent who said they trust their financial professionals as much as themselves.
Millennials want to put their money where their morals are.
The majority of millennials around the world want their personal values to help drive their investment strategy, with 78 percent saying it is important to know they are investing in companies that reflect their personal values. What’s more, 75 percent said it is important to know their investment is doing social good. On the flip side of that conscientiousness coin, 75 percent said there are companies they don’t want to invest in because the firms violate their personal principles and 73 percent said they would sell shares of a company that had negative environmental and/or ethical issues.