The Traditional Idea of Retirement Is
Officially Extinct; Merrill Edge® Report Finds Change in How
Younger Generations View Life Milestones and Approach Finances,
Career and Family
Millennials are charting unexplored territory as the first
generation to plan for financial freedom instead of retirement,
according to the latest Merrill Edge® Report. Sixty-three percent
of millennials are looking to achieve the amount of savings or
income necessary to live their desired lifestyle, which drastically
differs from most (55 percent) Gen Xers and baby boomers who are
saving to leave the workforce.
The survey of more than 1,000 mass affluent Americans1,
conducted between March 21 and April 5, outlines a change in how
younger generations define life milestones and what it means to be
an adult. When asked about their top priorities in life,
millennials were significantly more likely than their older
counterparts to focus on personal milestones of working at their
dream job (42 percent, compared to 23 percent) and traveling the
world (37 percent, compared to 21 percent). Today’s 18- to
34-year-olds are also far less likely to prioritize traditional
life milestones, including being married (43 percent, compared to
51 percent) and being a parent (36 percent, compared to 59
percent).
“This spring’s report shows us even more differences between how
millennials and their parents view and save for the future,” said
Aron Levine, head of Merrill Edge. “Young adults tell us they are
willing to do whatever it takes to achieve freedom and flexibility,
even if it means working for the rest of their lives. To ensure
success, it’s increasingly important these younger generations take
a hands-on, goals-based approach to their long-term finances and
prioritize saving in the short term.”
Millennials’ “fear of missing out” (FOMO) philosophy is also
evident in their spending habits, as the majority say they’re more
likely to spend money on traveling (81 percent), dining out (65
percent) and exercising (55 percent) than saving for their
financial future.
Savings perceptions versus realties
Although 45 percent of millennials consult their parents
“always” or “often” for advice on financial matters, perhaps
parents should be consulting their children. The report found every
generation views their elders as superior savers – 54 percent of
respondents say the Greatest Generation does a “very good” job,
followed by baby boomers at 45 percent, Gen Xers at 19 percent and
millennials at only 8 percent, including only 15 percent of
millennials themselves.
However, when asked how much of their income they save annually,
millennials say they save 36 percent more than their generational
counterparts, with over one-third of millennials putting more than
20 percent of their salary toward savings goals.
Overall, 42 percent of respondents are saving less than 10
percent of their salary, and 7 percent don’t save at all. This
broader savings gap may be the reason why respondents don’t feel
prepared for life’s “what-if” scenarios:
- Seventy-one percent are not very
confident they could achieve their financial goals if they were to
get divorced, with just 5 percent planning for the
possibility.
- Sixty-four percent say they are not
very confident they could be financially successful if they had
children, with just 23 percent saving for a family.
- Forty-eight percent are not very
confident they could achieve their goals if they outlived their
significant other.
Americans agree they could do a better job to prepare for life’s
surprises. Fifty-nine percent believe individuals in the U.S.
should be required to save for their own retirement, and 48 percent
feel financial education should be a requirement.
The future of investing
Innovations in technology have a significant influence on the
future of saving, as many Americans increasingly embrace recent
industry advancements to make investment decisions and receive
guidance.
Two in five Americans say they make and manage their investments
through an online or mobile portal. One in eight Americans are
currently using a robo advisor or would consider doing so in the
next year, and this number jumps to 22 percent among millennials.
Overall, respondents cite this ability to invest via mobile makes
them feel knowledgeable (51 percent), empowered (31 percent) and
savvy (14 percent).
When asked about predictions for the next decade of investing,
Americans believe emerging technologies will allow more people to
invest (41 percent), most investments will be automated (34
percent), and the 401(k) account will no longer be the “gold
standard” (29 percent).
“We’re at a pivotal moment in time, when our physical and
digital worlds are intersecting more than they ever have before,”
said Levine. “This growing shift is driving our high-tech and
high-touch approach to innovation, and the beauty is that consumers
are recognizing that planning for their later years is not a
one-size-fits-all process. With new technologies, customers have
the flexibility to be hands-on with their investment decisions,
while still consulting an advisor to help navigate complexities as
their lives change.”
For more in-depth information about the financial behaviors and
priorities of mass affluent Americans, read the entire Spring 2017
Merrill Edge Report here. A complementing infographic is available
here.
1 Merrill Edge Survey MethodologyConvergys (an independent
market research company) conducted a nationally representative,
panel sample online survey on behalf of Merrill Edge March 21-April
5, 2017. The survey consisted of 1,023 mass affluent respondents
throughout the U.S. Respondents in the study were defined as aged
18 to 34 (millennials) with investable assets between $50,000 and
$250,000 or those aged 18 to 34 who have investable assets between
$20,000 and $50,000 with an annual income of at least $50,000; or
aged 35-plus with investable assets between $50,000 and $250,000.
For this purpose, investable assets consist of the value of all
cash, savings, mutual funds, CDs, IRAs, stocks, bonds and all other
types of investments excluding primary home and other real estate
investments. We conducted an oversampling of 300 mass
affluents in the following markets: Los Angeles, Dallas, South
Florida, Chicago, Atlanta, and Phoenix. The margin of error is +/-
3.1 percent for the national sample and about +/- 5.6 percent for
the oversample markets, all reported at a 95 percent confidence
level.
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