Have Millennials been fooling us all along? New survey results show that one in six Millennials has $100,000 or more in savings, but there appears to be a healthy dose of skepticism circulating over the finding.
Stereotypes typically depict Millennials as having irresponsible savings habits, but survey results from Bank of America’s “Better Money Habits Millennial Report” suggest that Millennials are establishing themselves as just as good, if not better, than older generations when it comes to saving and budgeting.
In fact, the finding that 16% of Millennials have $100,000 or more in savings has doubled from the 2015 results, when only 8% said they had $100,000 or more. In comparison, 48% of Baby Boomers and 32% of Gen Xers have $100,000 or more in savings. The results also show that 47% of Millennials have $15,000 or more in savings, which is an improvement from the 2015 results, when only 33% had $15,000 or more saved.
But could these findings regarding Millennials really be true? Or is there another explanation?
Some of the skepticism arises because the findings do not necessarily mesh with other survey data. For example, findings in the 2017 Retirement Confidence Survey by Greenwald & Associates and EBRI show that 58% of Millennial workers (age 25-34) say they have less than $10,000 saved, including 34% who say they have less than $1,000. The findings in the RCS show, however, that 10% of respondents age 25-34 say that they have between $100,000 and $249,999 in savings and investments.
One possibility is that the age bracket used in the 2018 Bank of America report defined Millennials as ages 23 to 37, as compared to the 2015 report, which defined Millennials as ages 18 to 34. This three-year shift in age could make a significant difference – factoring in wage earners who are approaching age 40 and eliminating those between 18 to 22, many of whom were in college at the time.
Overall, the survey included 1,500 respondents, ages 18 to 71, half of which were Millennials, divided between older (ages 28-37) and younger (23-27) Millennials. This suggests that the findings were extrapolated based on 375 older and 375 younger Millennials. A Bank of America representative confirmed that only 5% of the younger Millennial cohort have $100,000 or more in savings, compared to 21% of older Millennials.
Another factor to consider is that the results were obtained through an online survey based largely on self-reported data, which can be misrepresented and skew the results, even for surveys conducted by the most respected of research firms.
To give the benefit of the doubt, recent market returns probably propelled a higher percentage of Millennials into the $100,000+ category, espcially if they have most of their investments in equities.
Interestingly, the stereotype that Millennials are looked upon as not being savvy money managers is compounded by the finding that 73% of Millennials themselves agree with this characterization.
Meanwhile, a new report – "Will Millennials Be Ready for Retirement?" – by the Center for Retirement Research paints a bleaker portrait for Millennials, contending that saving for retirement is getting harder for the generation. The report, which compares Millennials between ages 25-35 relative to other cohorts when they were the same age, suggests that “the increase in student debt, low rate of homeownership, and low rate of participation in retirement saving plans has produced a big decline in the median ratio of wealth to income compared to earlier cohorts.” CRR add that the good news is there is still time for Millennials to recover, as “retirement is still a long way off.”
