Are Millennials More Savvy About Retirement Than Boomers?
Whatever people say about millennials — how they don’t leave the family home and how they don’t want to work — they are certainly taking their retirement seriously. In fact, recent surveys find that millennials are actively saving — and starting to save significantly sooner than their Generation X or baby boomer predecessors, the Web publication IRIS writes. Meanwhile, another survey finds that baby boomers may be heading toward disaster, as more than a third are overexposed to stocks, reports CNN.com.
Sixty-seven percent of adults between 25 and 34 — the so-called “millennials” — whose employers offer 401(k) plans are saving, and that figure is significantly higher than it was a decade ago, according to Vanguard data cited by IRIS. And it’s not all due to the spread of automatic enrollment plans: A majority of those in their twenties and thirties consider retirement benefits “a major factor” when considering a job offer, according to a Transamerica Center for Retirement Studies survey cited by IRIS. Catherine Collinson, president of the group that did the survey, says that much of this has to do with “heightened levels of awareness,” as quoted by IRIS. This rate is particularly significant given that millennials are struggling in the job market following the Great Recession. The survey shows that while 69% of full-time working millennials get 401(k) benefits, only 42% of those working part-time do.
The Transamerica survey also found that millennials are twice as likely to “frequently” discuss retirement, compared to older workers; and they typically start saving at 22 years of age, compared to 27 years for the previous generation — the so-called “Gen X” — and 35 years for the average baby boomer.
Meanwhile, baby boomers aren’t doing that well with their retirement portfolios: A study by Fidelity found that 35% of those between 51 and 69 have too much of their portfolios invested in stocks, and 10% have everything in the stock market, CNN.com writes. With the market due for a correction, as many believe, that is not a smart move. Those in their early forties should allocate about 90% of their 401(k) to stocks; but those 10 years from retirement should decrease it to 70%, and then to 60% when they are five years away from retiring, according to Fidelity as cited by CNN.com.