Dispel Millennial myths to better serve younger plan participants
October 26, 2022
Perhaps no generation has felt the brunt of stereotypes heaped upon them more than Millennials: they’re disengaged, overly sensitive to feedback, unmotivated and…you get the idea. According to recent data, however, these assumptions don’t reflect reality.
Myths abound about Millennial savings habits and attitudes toward retirement, too. For plan sponsors and financial professionals, it’s important to dispel these myths to better serve Millennial needs.
Myth #1: Millennials spend too much
When you think of millennial spending habits, do you envision them splurging on avocado toast or mindlessly letting their savings slip away with each latte they buy? The truth is far from it.
Millennials are taking many setbacks in stride — including stagnant wages, student loan debt and increasing inflation — and doing their part to make ends meet. For starters, Millennials work longer hours and spend about the same amount of time pursuing education, volunteering and participating in leisure activities as their Gen X counterparts did when they were the same age.1
Millennials also spend less money than many assume they do. According to the most recent Bureau of Labor Statistics data, Millennials are thriftier than Gen X, spending less on food, housing, clothing, transportation, entertainment and even cell phone services.2
Advisors who assist Millennials with budgeting and financial planning need to put aside assumptions that any financial issues they have are due to poor spending habits. On the contrary, many graduated during significant economic downturns which may have impacted their early earnings potential. Combine the Great Recession and the pandemic’s economic fallout, and the impact on their peak earning years could be significant. In the end, the data shows that Millennials are concerned about their finances and generally spend money on many of the same things as older generations.
Myth #2: Millennials have it easier today than their parents
Younger generations may not face the same challenges as their parents, but that doesn’t mean they have it easier. A recent study by Pew Research Center found that most Americans — about seven-in-ten — think young adults today have a harder time than their parents’ generation when it comes to saving for the future, paying for college and buying a home.3
A Deloitte study showed that 36% of Millennials are most concerned with their cost of living. About half are living paycheck to paycheck and are worried about covering expenses. To try and make ends meet, a third (33%) of Millennials said they’ve taken on a second part- or full-time job — that’s in addition to their primary employment.4
The drive to get ahead is strong, and Millennials generally welcome opportunities to discuss financial strategies and ways to overcome the financial challenges they face.
Myth #3: Millennials aren’t worried about their futures
Millennials aren’t just sitting back and taking a “wait and see” approach to retirement. In fact, they’re generally concerned about their future financial status. Perhaps it’s because they need to pay just as much for living expenses as their Gen X counterparts, yet they earn 25% less.2
A consequence is that nearly a third (31%) of Millennials lack confidence that they’ll be able to retire comfortably, and almost as many (29%) don’t feel financially secure.4
In the end, lower incomes combined with rising cost of living expenses could make Millennials feel like they don’t have enough discretionary income to invest in retirement savings. Plan sponsors and advisors may need to spend more time working with them to help overcome their retirement planning hurdles and fears. Providing easy-to-digest financial resources can be helpful in addition to budget reviews, retirement income calculations and other tools.
Even in the face of dire outlooks, many Millennials still feel optimism and want to tackle the future with confidence. Plan sponsors and advisors have an important role to play in helping ensure that they have the guidance and resources they need to do it.
1U.S. Bureau of Labor Statistics, Time use of millennials and Generation X: differences across time, January 2022.
2U.S. Bureau of Labor Statistics, Table 26-02. Consumer Expenditure Surveys, 2020, September 2021
3Pew Research Center, Most in the U.S. say young adults today face more challenges than their parents’ generation in some key areas, February 28, 2022
4Deloitte, The Deloitte Global 2022 Gen Z & Millennial Survey, 2022.