They say no. Experts, however, say yes.
“I hesitate to say millennials are killing it with savings,” said Stefanie O’Connell, a millennial money expert and author of “The Broke and Beautiful Life.” “We have a long way to go.”
Young Americans face numerous financial hurdles, including crippling student debt that’s postponing marriages, first homes and families. In fact, 56% of millennials said during a Bankrate.com survey last year that they put off at least one major life event as a result of student loans. Still, they’re confident about their financial standing and futures — 71% expect to be financially secure and better prepared for unexpected events this year, according to an upcoming New York Life survey of 1,800 adults 30 and older.
So where’s the disconnect? Usually, reports that say millennials are doing well with their savings are relying on self-reported surveys, O’Connell said, as opposed to those based on data. She pointed out a Merrill Edge survey from October 2015 that illustrates millennials’ perceptions versus habits with their money: 88% of millennials said they intended to save more, yet only 36% said they planned to spend less.
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Millennials are more educated than their elders, and those with a college degree are more likely to save for retirement, said Tom Allison, deputy director of policy and research at Washington, D.C.-based Young Invincibles, an advocacy group for young Americans. “Financial security and college education certainly correlate,” he said. But even this isn’t necessarily good news when it comes to how much money they’re saving, since they’re also the most indebted generation — likely because of the cost of their education and because they often earn lower incomes from working in an economy recovering from the recession, he said.
Millennials are also worse off than their parents were at the same age, according to a report Allison authored that analyzed and compared Federal Reserve Board of Governors public surveys from 1989 and 2013. And though they’re confident, they’re also not afraid to ask for help, said Mark Madgett, senior vice president and head of the agency department at New York Life. Almost half of the millennials they surveyed said they’d seek help from financial professionals to create financial plans.
Automating savings is the key to actually saving, O’Connell said. “To make a dent in savings, it has to be a habit.” By putting away a portion of your paycheck automatically, it’s as if you’re paying yourself first.
Young people should also begin investing in employer-sponsored retirement accounts or individual retirement accounts (IRAs) since they’re responsible for their futures, as opposed to their parents’ and grandparents’ generations who had pensions. Another surefire way to have a realistic idea of how much you’re saving, O’Connell said, is to track your money closely, because it lets you see how you think you’re doing compared with how you’re actually doing.