More than half (54%) of millennials say debt is their “biggest financial concern currently,” according to a Wells Fargo survey focused on Gen-Y attitudes toward savings and retirement. 42% say their debt is “overwhelming,” twice the rate of boomers who were also surveyed for comparison.
Paying off student loan debt is the top concern of millennials. More than half of millennials (64%) say they financed school through student loans as compared with only 29% of boomers who financed through loans. About half of millennials (49%) say if they had $10,000, the “first thing” they’d do is pay down student loan or credit card debt.
Gen-Y Wants to Talk to Grown-Ups About Money, Not People Their Own Age
Gen-Y most often turns to family for advice about money. As the make the transition into adulthood, more than half (57%) say their parents have most influenced them and the ways in which they view money. A majority (78%) say they learned “a great deal” or “somewhat” from their parents about personal finance. In fact, parents were top ranked (60%) when millennials listed where they are most likely to go for advice when investing their money.
When they specifically have questions about investing, 36% of millennials turn to their parents or other family members as their first source for guidance, followed by a paid professional investment advisor (17%) and online sites (15%).
Insight for Financial Marketers: Instead of targeting financial education programs about investments and savings at Gen-Y directly, consider giving tools to parents. Parents with kids in high school, college and even those with empty nests could use help talking about money.
Interestingly, a majority of Gen-Y (59%) says they would be interested in working with a financial advisor, and 57% of them would prefer a seasoned advisor with years of experience, over someone who is closer in age and in the same life stage as them. Similar to boomers, millennials prefer face-to-face meetings when establishing financial relationships.
Insight for Financial Marketers: Think carefully about the imagery you use in your marketing materials targeting Gen-Y. It might be tempting to show two Gen-Y types — two friends perhaps, or maybe one is an advisor at your organization — gleefully engaged in a conversation about investments. But this might not be the right image to project if millennials are looking for the wisdom and insight that comes with age and experience. Similarly, it could be tricky using images showing the future outcomes of investing early, since the concept of retirement is such a long way off.
Never Mind That Nasty Recession, Gen-Y is Full of Financial Self-Confidence Anyway
Millennials are confident in their future and (67%) of millennials believe they will achieve a greater standard of living than their parents. Almost three-fourths (72%) of millennials say they feel in control of their future and believe they can achieve their goals. Three in four millennials (77%) say that if they lost their job today, they have confidence they could find a comparable one. Odd, in light of the economy in which they came of age.
When asked about working, three out of four millennials (75%) agree the best way to get ahead financially is to work for a company that offers a career path. A quarter of millennials believe breaking out on their own and starting a business is best way to get ahead.
Half of millennials (49%) say they are confident in their own abilities to earn and save money for their financial future, and more than a quarter (27%) say “time is on my side” for savings and investments to grow. 70% percent are “very” or “somewhat confident” that they will be able to save enough to afford the lifestyle that they hope to have in retirement. Maybe millennials should have another chat with their folks and see how they feel about that same subject.
Is College Worth it Anymore?
When asked about the cost for a college education and the opportunities a degree provides, two in five millennials (43%) rate the value of their education as “a great value” and 45% say “somewhat of a value.” About a third of millennials (31%) feel they would have been better off working, instead of going to college and paying tuition. Over half (57%) disagree with the idea that going to a more expensive and prestigious college always outweighs going to a less expensive school.
Insight for Financial Marketers: Think hard about whether or not you want to enter- or remain in the student lending market. It’s already a difficult product for financial institutions to offer profitably, and it’s not getting any easier — particularly if the intended target audience is wrestling with the value of higher education and already feels burdened by debt.
Millennials feel it is important to learn about financial literacy in school. A majority of millennials (79%) think personal finance should be taught by high schools, 73% say it should be taught by colleges and 70% feel it should be taught by parents. The top three personal finance topics that millennials “wished” they learned more about in school are: basic investing (70%), how to save for retirement (60%) and how loans work (59%).
Saving vs. Paying Down Debt?
Despite their concerns about debt, nearly two-thirds (61%) of millennials see themselves as “savers,” even if their actions don’t support this. Among Gen-Y consumers, 66% of men and 56% of women think they are “savers.” 49% of millennials say they are saving for retirement (54% men vs. 43% women). 51% say they have not begun to save, but plan to by a median age of 30.
Of the 51% of millennials who are not yet saving, 53% say they are financially “overwhelmed,” and this is slightly more pressing for women (55%) than for men (51%). When asked what barriers are preventing them from saving, 87% of millennials say they don’t have “enough money to start saving” or they want to pay down debt first (81%).
When asked what was their biggest trigger to start saving for retirement, one in three millennials (34%) say “they realized that starting early can result in a bigger nest egg down the road.” More than a quarter of (29%) indicated that the presence of a work place retirement plan was their primary motivation.
For the subset of millennials with various retirement savings vehicles 72% say they are in employer-sponsored retirement plans, 40% in an IRA and 33% in a bank savings account. Of those millennials that have accumulated retirement savings, almost half (47%) are saving between 1% and 5% of their income for retirement, while 31% are saving 6 to 10% and 14% are saving more than 10%. 8% were once saving for retirement but are no longer doing so.
Little Faith in Stock Market
More than half of millennials (52%) say they are “not very confident” or “not at all confident” in the stock market as a place to invest for retirement. This is particularly true for millennial women, of whom 67% are “not very confident” or “not at all confident” in the market versus Gen-Y guys (38%).
But they can’t be too concerned, because a third of Gen-Y doesn’t even know where their savings are invested. Among those saving for retirement, 32% of millennials are “not sure” how much of their savings are in stocks or mutual funds. Nearly one in five (18%) say they are 100% invested in stocks or mutual funds. 11% say all their savings are in cash/bonds.
The research was conducted by Market Probe on behalf of Wells Fargo Retirement. Survey respondents included 1,414 millennials between the ages of 22 and 32, and 1,009 baby boomers between the ages of 48 and 66 from the Research Now online panel. Gen-X consumers were apparently excluded from the study. The research was conducted between February 6 and 15, 2013.