Millennial 401(k) savers have better financial habits than baby boomers
This is especially true when compared with a national sample of 514 baby boomers with 401(k)s. While millennials are not saving at least 15% of their annual salary for retirement, as T. Rowe Price recommends, they recognize that saving for retirement is important and are interested in saving more.
More millennials than baby boomers track expenses carefully (75% vs. 64%) and stick to a budget (67% vs. 55%). And while baby boomers on average are saving a slightly higher percentage of their salary for retirement than millennials are saving, more millennials have increased their retirement savings within the past 12 months (40% vs. 21%).
This suggests that they are acting in accordance with their financial priorities, as millennials ranked contributing to a 401(k) but below the match and paying down debt equally as their top priority.
Millennials are saving nearly as much for retirement as baby boomers: Millennials are saving an average of 8% (median: 6%) of their annual salary for retirement, while baby boomers are saving an average of 9% (median: 8%).
But more millennials have increased their 401(k) savings this year compared with baby boomers: Almost double the percentage of millennials are saving a higher percentage of their income in 401(k) contributions in the past 12 months compared with baby boomers (40% vs. 21%).
More millennials wish their employers auto-enrolled them in 401(k)s at a higher savings rate: Of the millennials who were auto-enrolled in their employers' 401(k) plans, 47% wish their employers had enrolled them at a higher contribution rate. However, only 34% of baby boomers who were auto-enrolled wish their employers had enrolled them a higher contribution rate.
Millennials are more likely than baby boomers to track expenses and budget: 75% of millennials track expenses carefully, while only 64% of baby boomers do the same. Similarly, 67% of millennials say they stick to a spending budget, compared with 55% of baby boomers.
Millennials want advice and are more likely to use robo-advisors: 58% of millennials say they would benefit from help managing spending and debt, compared with only 24% of baby boomers. Additionally, 38% of millennials have employed an advisor in the past five years, including 11% who have used robo-advisors. While about an equal percentage of baby boomers have employed an advisor, only 2% have used robo-advisors.
They fund emergencies differently: Millennials are more likely than baby boomers to seek the help of family and friends (55% vs. 17%) if faced with a sudden financial emergency. They are also more likely to use credit cards (57% vs. 43%). ■