Burdened by student loans they say are “unmanageable,” Millennials are still managing to save for retirement.
A third (34%) of Millennials have student loan debt, with a median debt load of $19,978, and 75% say their student loan debt is “unmanageable,” according to a new survey. Yet, of this group, 70% are still saving for retirement, at an average savings rate of 5.5%.
Not that everyone is there yet; though most (59%) have started saving for retirement, 41% have not. Of the Millennials who are not saving for retirement, 64% say they are “not making enough money to save for retirement,” according to the Wells Fargo 2016 Millennial Study.
Million ‘Airs’
According to the survey, the nearly two-thirds (64%) of Millennials who say they will not be able to accumulate $1 million report a median personal income of $27,900, and yet half of those have started saving for retirement. Of the millennials who say they won’t be able to save $1 million but have started saving for retirement, nearly 4 in 10 (37%) are putting away more than 5% of their income, and 7% are putting away more than 10%.
Of the 32% who do expect to save $1 million, the median annual personal income reported by this group is $53,000. Seventy-seven percent have started saving for retirement. Two-thirds of those are deferring more than 5% of their income, and 28% are putting away more than 10%.
The study was conducted by GfK and surveyed more than 1,000 U.S. adults between the ages of 22 and 35, with an additional oversample of 500 hispanic Millennials for comparison purposes.
Financial Adults
More than 8 in 10 millennials (85%) say that saving for retirement is an important part of becoming a “financial adult,” and 82% say that seeing people who are comfortably retired today makes them want to save more for their own retirement. At the same time, less than half (45%) have “an established routine” for reviewing their finances and a little more than half – 54% – say they have a budget. Of the 46% who do not have a monthly budget, 37% say they don’t need one, and 33% say it’s not a priority.
Six in 10 Millennials (59%) say the current economic climate makes them uncomfortable about investing their money, though only about half (52%) of today’s Millennials say the volatility of the stock market makes them worry they will “lose their retirement savings in the market.”
