Today, we released the Wells Fargo Millennial Study on how this generation looks at money and their future. While 80 percent of millennials, ages 22-33, say the Great Recession taught them they have to save “now” to survive economic problems down the road, only about half (55%) are actually saving for retirement.
What was more concerning to me was that the savings picture looks different for the genders with 61 percent of men and 50 percent of women reporting that they are saving. As a result, men (58%) are more satisfied than women (41%) with their savings at this point in their lives. This satisfaction trend continues around debt levels, employment prospects and the overall financial situation of millennial men and women. The difference may hinge on the fact that the median annual household income reported by millennial men is $61,000 versus $45,000 for women.
Regardless of the gender differences, 42% of all millennials say debt is their biggest financial concern currently. Almost half (47%) are using half of their monthly paycheck towards debt. If you’re facing that kind of situation, what should you do about it?
Do the math. Sit down with a calculator and figure out how much debt you can comfortably repay each month after essential expenses. Equally as important, use a retirement savings calculator to figure out what you need to save to reach your financial goal when you retire.
Set it and forget it. Usually contributing to your 401(k) plan is an automatic process through your paycheck, which means you set it up once and then don’t have to think about it again. Once you get into the habit of saving, you won’t miss it and will thank yourself later.
Take their advice. When asked what’s the top piece of advice they would give to someone starting out, millennials said, “Don’t spend more than you earn.” And boomers we surveyed for comparison said, “Start saving for retirement now.” Each generation is taking a lesson form their current situation.
Saving doesn’t have to be an either or choice. The good news for millennials is that time is on their side. They have the benefit of a long-term investment horizon that gives them a good opportunity for growth. It is important now more than ever to pick up the pace and step up your savings to make a big impact to your financial future.
How satisified are you with your savings level? Have you calculated what you need to save now for your future? What piece of advice would you give to your younger self? Let us know!