When it comes to millennials and retirement savings, how are they fairing? When my millennial clients meet with me for the first time, they often have one big thing on their mind – am I on track? They have heard the message loud and clear to start saving for retirement as early as possible. However, many have no idea how much to save or how to balance that with mounds of student loan debt.

It’s no secret that many millennials have been consumed by student loan debt since finishing college. According to the New York Federal Reserve, millennials now have more than $1 trillion of debt. This level of debt, up 22% in just five years, is more than any other generation in history. According to a recent survey conducted by LendEDU, 50% of millennials have credit card debt with the average debt balance over $6000. This situation may leave you wondering how millennials ended up in such a sorry state.

As important as the debt is how millennials’ economic choices vary from the expectations. Millennials are much more conservative than the debt balances may indicate. In fact, in comparison to previous generations this group is significantly more fiscally conservative.


millennials more fiscallly conservative

Why millennials are more fiscally conservative

Millennials are the generation that was born between 1981 and 1996. They experienced the cosmic duality of yin and yang like few other generations. Here are some examples:

  • They witnessed a global financial crisis. They also witness displays of extreme wealth that are more visible than ever, thanks to social media.
  • Millennials benefit from dramatic advances in health care, while living through an opioid epidemic (now a major cause of death in the U.S.)
  • They have witnessed and contributed to monumental technological advances. At the same time, they must reconcile the ethical and financial implications of 29 years of global military actions frequently led by the U.S.

Do these experiences affect the behaviors of millennials? It seems that it has led millennials to be more conservative with their money.

How Millennials Compare to Gen X

The debt levels accumulated by millennials exceed those of the previous generation, Generation X. More interest, at a similar point in time, the complexion of the debt is very different.

According to a 2018 report from the St. Louis Federal Reserve Bank, mortgage debt is about 15% lower for millennials and credit card debt among millennials was about two-thirds that of Gen X.

However, student loan debt was more than 300% higher. Student debt affects a much broader age segment than just millennials, at over 43 million borrowers, but the burden weighs most heavily on this generation.

Given the behavior of previous generations, it seems that this lower credit card debt and mortgage debt reflect millennials’ more risk-averse approach to their finances.


millennials and retirement savings

Millennials and Retirement Savings

Another marked behavioral difference between generations is the higher levels of retirement savings among millennials than any previous generation at the same age. While Gen Xers had acquired about $13,600 at around the same point in time, millennials have saved $15,500 in retirement accounts on average.

Millennials are also more committed to higher education. From 200-2016, the number of people aged 25 to 29 with at least a four year degree increased by 25%.

Both increased retirement savings and additional education are behaviors that economists might consider conservative investment strategies, more so when paired with lower credit card debt. But these changes in attitudes or perspectives can be difficult to measure.

Millennials  Delaying Home Ownership

Another big difference in this generation’s spending behavior is millennials are delaying home purchases. Statistics from the U.S. Census Bureau and the American Community Survey illustrate this stark difference in homeownership. The number of millennials who own houses lags previous generations by about 8%.

Student debt was cited by the Federal Reserve in its January 2019 Consumer and Community Context report as a factor in millennials delaying homeownership. However, given millennials’ propensity to contribute more to their retirement savings accounts, it’s not certain that student loan debt alone is what is keeping them out of the housing market.

For example, in recent years, the trend toward urbanization has resulted in an increase in urban housing prices. This is particularly evident in counties where more young people live or are moving to. These rising housing prices nearest employment centers may partly explain why millennials have delayed entering the housing market.

Does this mean millennials better off?

Perhaps a different perspective of success is required when assessing the millennial generation. A perspective that emphasizes more than the acquisition of homes and other hard assets might be more appropriate. Homes and hard assets are more representative of an older generation’s measures of the American Dream.


millennials retiring early


After all, previous generations have led millennials down a path of global economic uncertainties and real estate booms and busts. Millennials are now showing their reluctance to commit to such long-term debt, given the times they have lived through and the true economic return on homes. Homes return little more than the rate of inflation, and when taxes, insurance and maintenance are factored in they look even less attractive.

The net result of these behavioral changes, paired with the economics of the environment, is that millennials’ average net worth is about $90,000, compared to Gen X of $130,000 at a similar age point.

Net worth isn’t the whole story, though. Millennials have emphasized post-secondary education, resulting in less time in the work force than their Gen X counterparts. Given this choice of education over employment, the net worth figures are quite logical. Although one might profess that in a few years these millennials will “catch up” and enter this phase of homeowner indebtedness, perhaps their approach on life deemphasizes the acquisition of things.

While long-term student debt has reduced millennials’ ability to gather assets at the same rate as previous generations, many of this generation seem to have adopted an alternative view on assets, preferring the acquisition of experiences and savings accounts over things. Studies show that experiences lead to longer-term happiness and may provide another perspective on which to gauge the fiscal state of millennials.

If you are a millennial who is struggling with finding balance between your various financial goals, reach out to us for a complimentary consultation. We can help you form a plan that will get you moving in the right direction.

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