Survey Reveals Generational Differences in Approaches to Saving

While more than half of Millennials, Gen-Xers and Baby Boomers on average prioritize saving for retirement over any other financial goals, differences emerge in their investment goals and preferences, according to new research.

BMO Wealth Management’s report, Generational Perspectives: How Millennials, Gen-Xers, and Baby Boomers Save and Invest, focuses on the attitudes and behaviors towards saving and investing across generations, based on a survey of 1,006 Americans ages 18 and older. The report also highlights distinctions in the way men and women save and invest, as well as the role psychological biases can play.

While saving and investing for retirement is important for Millennials, less than half (47%) cited it as a top priority, compared to 66% of Generation X and 64% of Baby Boomer respondents. For Millennials, shorter term goals, such as saving for a vacation (21%) and purchasing a new home or upgrading an existing home (26%), were also highly cited reasons to save and invest.

Survey participants also diverged on their saving and investing preferences between a short-term vs. long-term approach. When asked about their top three saving or investing options, 43% of Baby Boomers and 40% of Gen-Xers responded that “buy and hold for the long term” is a preference, but only 32% of Millennials said this is a top preference.

Generational differences also arose when non-saving/investor respondents were asked to explain why. According to the findings, 12% of Millennials said they worry about losing money, compared to only 7% of Baby Boomers. Meanwhile, 18% of Millennials apparently admitted that saving and investing is too complicated, compared to just 8% of Boomers. When asked what they find confusing about investing, 21% of Millennials cited “discomfort from a lack of understanding of the markets,” which was cited by just 12% of Gen-Xers and 10% of Boomers.

Mars vs. Venus

Gender differences are also revealed by the types of investments that survey respondents preferred. A high proportion of both men and women indicated a preference for managed investment portfolios (33%) and mutual funds or exchange traded funds (29%). Women, however, were found to be slightly more conservative, with 16% of respondents indicating a preference for CDs and money market securities, compared to 12% for men. Women were also less likely to invest in individual stocks than men (19% versus 25%), according to the findings.

Investment Preferences

The use of a portfolio approach was more frequently found among Baby Boomers and Gen-Xers than in Millennials. The use of managed portfolios was cited by 36% of Baby Boomers and 37% of Gen-Xers versus 28% for Millennials. Yet, Millennials do favor the use of mutual funds and exchange traded funds over investing in individual stocks (28% versus 21%).

And More

Other key findings show that the majority of respondents prefer to work with the assistance of a financial professional, with 28% using an advisor at a financial institution, 23% investing through an independent advisor and 18% investing with a full-service financial professional. And perhaps not surprisingly, the use of robo-advisors was slightly more common among Millennials (10%) than Gen-Xers (9%) and Baby Boomers (5%).

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