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What is the Financial Future of Millennials

Core Facts


Monday, September 16, 2019

A lot can be said for the Millennial generation, both good and bad. They’ve been called lazy, entitled, and other unflattering things. But they’ve also been credited for some of the greatest leaps forward in modern economic history. After all, the owners of just about every major and disruptive tech company are Millennials. But as for the rest of the generation who aren’t billionaires, when it comes to their financial future, things aren’t looking too positive.

The statistics have been quoted over and over again — More millennials live with their parents than with roommates. They are delaying marriage and homeownership and parenting for longer than any previous generation.

But the more disturbing statistic is that they show a surprising ineptitude in certain areas of money management. In recent studies, only 8 percent of those polled had a high level of financial literacy, while about a quarter, or 24 percent, demonstrated just a basic understanding of how to manage their money. [3]. And a generation that lacks secure pensions will certainly need to increase their financial IQ, and quickly.

There is the added burden of carrying large debt from student loans and other sources of long- term debt. And without the financial knowledge to dig themselves out of their money pit of debt, this can become an insurmountable setback for a large portion of the population.

“Young people who have a college degree today are much more likely than previous generations to start their economic life in debt,” says Annamaria Lusardi, academic director of the Global Financial Literacy Excellence Center at the George Washington University. “Universities can do a better job providing students, in particular, those with student loans, with financial education.” 

Perhaps their saving grace is that Millennials have shown the greatest increase in their savings rate compared with any other generation, according to data from Fidelity. The typical 20- something is now stashing away 7.5% of income vs. just 5.8% in 2013.  Generation X and Boomers are still saving larger percentages of salary but have not stepped up their contributions by nearly as much.

Young people who are making an effort to stockpile some savings have one big advantage-- time. With traditional pensions disappearing and Social Security in trouble, saving now is their safest bet, and young people have a head start in this category. Compound growth over an extra 10 years may double your nest egg by age 70, which is why some savvy Millennials are outpacing previous generations in building wealth.

By making a concerted effort to increase financial literacy and by starting to plan and save for their future now, Millennials will have a head start on the most important savings plan they’ll ever embark on and begin to accumulate wealth from a young age.

 

 

IMPORTANT DISCLOSURES

 

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable-- we c.an not assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

.David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC.

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Founded in 1976, David Lerner Associates is a privately-held broker/dealer with headquarters in Syosset, New York and branch offices in Westport, CT; Boca Raton, FL; Lawrenceville, NJ; and White Plains, NY. For more information contact David Lerner Associates Call 516-921-4200 Visit our website: www.davidlerner.com

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Jake Mendlinger
Account Manager
Zimmerman/Edelson
516.829.8374 X 232
jmendlinger@zimmed.com

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