Eight in Ten Millennials Say Great Recession Taught Them to Save “Now,” Wells Fargo Survey Finds | Be Korea-savvy

Eight in Ten Millennials Say Great Recession Taught Them to Save “Now,” Wells Fargo Survey Finds

Pronounced Income Gap Between Millennial Men and Women Sets up Differences in Saving and Sense of Financial Security (image: Tax Credits/ flickr)

Pronounced Income Gap Between Millennial Men and Women Sets up Differences in Saving and Sense of Financial Security (image: Tax Credits/ flickr)

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CHARLOTTE, N.C. June 10, 2014 (Korea Bizwire)–As millennial Americans have experienced the effects of the Great  Recession of 2008, a strong majority (80%) say it has taught them they  have to save “now” to “survive” economic problems down the road. Despite  this generation’s reported lesson, 45 percent are not saving for  retirement, while slightly more than half (55%) are saving.

The savings  picture varies by gender with 61 percent of men and 50 percent of women  reporting that they are saving. This difference in saving rates may  hinge on the fact that the median annual household income reported by  millennial men is $77,000 versus $56,000 for women. For college-educated  millennials, median annual household income is reported to be $83,000  for men and $63,000 for women.

About half of all millennials report they  are “satisfied” with their savings at this point in their lives, but the  gender discrepancy is pronounced, with 58 percent of men feeling  satisfied, versus 41 percent of women. These findings are part of the  2014 Wells Fargo Millennial Study, conducted online by Harris Poll on  behalf of Wells Fargo, released today at a Women’s  Institute For A Secure Retirement (WISER®) forum in Washington, DC.  The survey was conducted among over 1,600 U.S. adults aged 22-33  (“millennials”), and among over 1,500 U.S. adults aged 49-59 (“baby  boomers”). 

“The silver lining of the recession that started over five years ago is  that a majority of millennials get that saving is a necessity and  even equate it with ‘surviving’ tough times. But millennial women are  starting out their working lives making far less than men and, as a  consequence, are saving less and feeling less contentment at the start  of their working lives,” said Karen Wimbish, director of Retail  Retirement at Wells Fargo. 

The Pressure of Debt 

Millennials are struggling under the pressure of debt, with 42 percent  saying “it is their biggest financial concern currently.” Four in ten  say their debt is “overwhelming” versus 23 percent of baby boomers.  Forty-five percent of millennial women feel “overwhelmed” by debt,  versus 33 percent of millennial men. Perhaps due to big debt  obligations, over half of the millennials (56%) say they are “living  paycheck to paycheck,” regardless of gender. 

What Kind of Debt? 

When asked to rank their number one financial concern after paying  day-to-day bills, millennials cite paying off student loans (29%) as  their top concern, whereas boomers cite saving for retirement (44%).  When asked to estimate certain categories of debt as a percentage of  monthly pay, millennials report their debt breaks down, on average, as  follows: credit card debt, 16 percent; mortgage debt, 15 percent;  student loan debt, 12 percent; auto debt, 9 percent; and medical debt, 5  percent. Among all millennials, 47 percent are allocating 50 percent or  more of their paychecks to these types of debt. 

“People have to closely examine what they are spending their money on  and figure out the best way to comfortably manage debt and savings  levels,” said Wimbish. 

Retirement and Saving 

The progress in accumulating investable assets proves to be another area  of difference between the genders, with college-educated millennial men  reporting median household investable assets of $58,500 and  college-educated millennial women reporting median household investable  assets of $31,400. 

Of those millennials who have started saving, almost half (46%)  are saving between 1-5 percent of their income for retirement; 31  percent are saving 6-10 percent; 18 percent are saving more than 10  percent. The percentage of income saved by men and women greatly varies,  with half of women (53%) saving between 1-5 percent versus 39 percent of  men. The percentages of men and women who are saving at the 6-10 percent  level are both about a third; however, over a quarter of millennial men  (26%) are saving at a rate greater than 10 percent versus only 9 percent  of women. 

Seven in ten (72%) millennials are confident they will be able to save  enough to create the lifestyle they want in the future, but millennial  women are far less confident than their male counterparts, with 63  percent expressing confidence versus 80 percent of men. 

Of the four in ten millennials who are not saving yet, 84 percent say  they are not doing so because they “do not have enough money to save  right now,” with no difference between the genders. Perhaps as a way to  lock down a savings discipline, over half of both boomers (56%) and  millennials (55%) favor a mandatory retirement savings policy. 

“Millennial men are earning more, saving greater percentages of their  income and report having more accumulated assets. Women are lagging  behind men in their savings efforts, and this could explain why they  feel less satisfied with their overall financial situation,” added  Wimbish. 

Three-quarters of millennials are confident they have the knowledge to  address any financial problems in the next ten years, with 70 percent of  millennial women agreeing with this versus 84 percent of millennial men.  While their confidence is high, when it comes to estimating their  retirement needs, 40 percent of millennials say they have “no idea” what  that amount will be.

Nearly a third (31%), say they will need under $1  million while 15 percent say they will need $1 million to $2 million.  For boomers, more than half (54%) say they “can’t estimate” how much  they will need in retirement. Twelve percent say they will need $500,000  to $1 million, and 12 percent say $1 million to $2 million. 

Increased Confidence in the Stock Market 

Despite the ups and downs of the market, 59 percent of millennials and  66 percent of boomers say the stock market is the best place to invest  for retirement, representing a roughly ten percentage point increase for  both groups from last year’s study. However, the genders view the stock  market differently, with only half of millennial women (49%), and 69  percent of millennial men agreeing that the stock market is the best  place to invest for retirement.

A quarter of those millennials saving  for retirement are “not sure” how much of their savings are invested in  stocks or mutual funds. About one in five (18%) millennials currently  saving for retirement say they are invested 100 percent in stocks or  mutual funds, 26 percent say they are in a range of 50 to 75 percent in  stocks or mutual funds. Thirty percent say they are invested 25 percent  or less in stocks or mutual funds. 

“I was pleased to see that millennials are warming up to the stock  market, yet concerned to see the huge difference in sentiment among  women, who should be on par with men at this stage,” said Wimbish.   “Still there’s about a third who are underinvested in stocks or all in  cash, and a quarter who aren’t even sure what they’re invested in.  Optimism doesn’t always translate into investing  in the stock market for retirement.” 

Millennial Optimism 

Millennials feel confident in many aspects of their personal lives, with  seven in ten (69%) saying they feel better off financially than others  in their own generation. In addition, 68 percent of millennials expect  their standard of living before retirement to be better than their  parents. 

A majority (84%) of millennials feel they have the skills to succeed in  their career goals when they are 40. More than three quarters (78%)  believe that if they lost their job they could find a comparable one  within a year. This is in sharp contrast to boomers, of whom 58 percent  believe they would be able to find a comparable job within a year. 

There is a difference between men and women millennials in the  confidence they feel about building their careers, with one in five  millennial women “worried” about their ability to build a career in  their desired profession versus one in ten millennial men. 

The Value of College 

Though college debt makes up a big part of the millennial financial  picture, three-quarters (76%) of millennials who attended college agree  that their college education was worth the cost. More than half of  millennials (56%) report relying on student loans to finance college  versus 35 percent of boomers. 

A look at the reported median household incomes of those millennials who  attended college and those who did not demonstrates the gap in wages  that not earning a college degree may produce. 

Household Income and Assets of College Grads vs. Non-College Grads 

         College Grad        Non- College Grad 
Income (Median)        $72,800        $34,700 
Investable Assets (Median)        $43,300        $21,600 

Advice to Others Starting Out In Their Careers 

Since debt is a top financial concern for most millennials, the most  important financial advice they would impart to someone starting out is:   “Don’t spend more than you earn” (33%), followed by “Get educated about  your personal finances” (17%), and “Start saving for retirement now”   (16%). This contrasts with boomers, 43 percent of whom would tell those  starting out today to start saving for retirement now. 

Whom Do They Trust for Financial Advice? 

When millennials were asked whom they trust for credible information to  help them make financial decisions, a majority cited “family” (57%),  followed by “financial institutions” (54%) and “personal finance  experts/personalities” (50%). Boomers cite “personal finance  experts/personalities” as their first choice (57%), followed by   “financial institutions” (45%) and then followed by “family” (40%) as  their last choice for financial advice. 

While over half of millennials (55%) don’t think they have enough money  to have a financial advisor, 16 percent are using a paid professional,  up from 8 percent a year ago. Similar to last year, 59 percent of  millennials who do not use a paid advisor say they would prefer a   “seasoned advisor” with years of experience, but there was a slight rise  this year (from 20% to 26%) among those who want an advisor closer to  their age, who can potentially better understand their financial  goals

For help understanding how to prepare for and live in retirement, visit  Wells Fargo’s My  Financial Guide. To find out how much you should be saving for  retirement go to My  Retirement Plan. Visit the Beyond  Today blog to share your financial insight and join the conversation. 

About the Survey 

The 2014 Wells Fargo Millennial study was conducted online by Harris  Poll on behalf of the Wells Fargo Wealth, Brokerage, and Retirement  (WBR) team between April 15 and May 2, 2014. Survey respondents included  1,639 millennials between the ages of 22 and 33, as well as 1,529 baby  boomers between the ages of 49 and 59. Oversample completes were  collected for millennials and baby boomers in the Charlotte (134  millennials, 151 boomers), Minneapolis (156 millennials, 157 boomers),  Atlanta (157 millennials, 160 boomers) and NYC (150 millennials, 158  boomers) markets. Results were weighted, as needed, to represent the  most recent U.S. Census data based on: age, sex, race/ethnicity,  education, region and household income. 

About Nielsen & Harris Poll 

On February 3, 2014, Nielsen acquired Harris Interactive and Harris  Poll. Nielsen Holdings N.V. (NLSN) is a global information and  measurement company with leading market positions in marketing and  consumer information, television and other media measurement, online  intelligence and mobile measurement. Nielsen has a presence in  approximately 100 countries, with headquarters in New York, USA and  Diemen, the Netherlands. For more information, visit www.nielsen.com

About Wells Fargo (Twitter @WellsFargo) 

Wells Fargo & Company (WFC) is a nationwide, diversified,  community-based financial services company with $1.5 trillion in assets.  Founded in 1852 and headquartered in San Francisco, Wells Fargo provides  banking, insurance, investments, mortgage, and consumer and commercial  finance through more than 9,000 locations, 12,500 ATMs, and the internet  (wellsfargo.com),  and has offices in 36 countries to support customers who conduct  business in the global economy. With more than 265,000 team members,  Wells Fargo serves one in three households in the United States. Wells  Fargo & Company was ranked No. 29 on Fortune’s 2014 rankings  of America’s largest corporations. Wells Fargo’s vision is to satisfy  all our customers’ financial needs and help them succeed financially.  Wells Fargo perspectives and stories are also available at blogs.wellsfargo.com  and at wellsfargo.com/stories.

Source: Nielsen & Harris Poll and Wells Fargo (via BusinessWire)

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