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Here’s How Other Millennials Are Saving For Retirement

The retirement savings habits of the millennial and Gen Z generations might surprise you.

Articles by Pat Advaney
By Pat Advaney Senior Director of B2B Marketing, Betterment Published May. 27, 2020
Published May. 27, 2020
3 min read
  • 88% of millennials and Gen Z are actively saving some money on a monthly basis.

  • 73% are contributing at least 3% of their monthly salary to their retirement savings plan.

  • Our goals-based investing approach can help all generations save and invest for their future.

When my daughter was about 8, she told her class that my job was “working with old people.” Not exactly—retirement planning is for people of all ages. Come to think of it, anyone over 18 was probably considered “old” to her, so maybe she had a point.

With easy access to 401(k)s and IRAs, more people than ever before are saving for retirement. But what about millennials and Gen Z? It turns out that they, too, have heard the message about the need to save for retirement.

We surveyed millennials and Gen Z to find out what their attitudes were on saving for retirement.

In a recent Betterment for Business survey, “Employee Retirement Preparedness: Millennials and Gen Z,” we found that:

  • 71% of Gen Z and 82% of millennials say they do not feel too young to start saving for retirement.
  • 88% are actively saving some money on a monthly basis—including their retirement savings plan.
  • 73% are contributing at least 3% of their monthly salary to their retirement savings plan.

Chart showing saving habits of millennials and Gen Z

Save for retirement

While more millennials are graduating from college compared to previous generations, many are starting their careers with significant amounts of student loan debt that shapes their relationship with finances early on. It may be no surprise that paying down that debt is just one of the top financial priorities, and that 77% of survey respondents feel financially stressed as a result.

  • 20% are saving less than $100 monthly—including their 401(k) and other retirement savings accounts.
  • 28% also receive some type of financial assistance from parents and/or family.
  • 1 in 3 are dipping into retirement savings early—not only for debt payments and medical expenses, but for travel and leisure activities.

Charts showing different financial priorities for millennials and Gen Z

In addition, even when they are saving for retirement, Millennials are investing more conservatively than we typically suggest for their age group.

Goals-based investing can help any generation invest for a better future.

Betterment’s goals-based approach to investing can help millennials with their savings habits. Having different pools of money for different goals—some short-term, some long-term—allows investors to assign a purpose and think about each pool differently.

For example, using an emergency fund can help with unexpected expenses, instead of tapping into retirement savings, which results in penalties and lost growth. Travel or leisure activities should be paid for out of savings set aside specifically for that purpose. In short, anything that you want to do in the future that comes with a significant price tag should be defined as one of your goals.

Having accounts to meet short-term goals means that accounts to fund longer-term goals—such as retirement—can remain untouched and continue to grow. And, each account can be set to the right risk level appropriate to the amount of time you have. People who are decades away from retirement can invest their long-term accounts more aggressively, comfortable in the knowledge that their short-term goals are invested more conservatively.

Goals-based investing can be a good strategy for all generations—for Millennials, and not just (as my daughter would say) “old people.”

Set up your goals
This article is part of
Original content by Betterment

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