We’ve all heard of the term “Millennials,” but who they are exactly is a lot less certain. “Millennials” is often used to stereotype those who are free spirits that love traveling, brunch, and avocado toast. But the term Millennials is representative of an entire generation, just like “Baby Boomers.” So, who are Millennials, and how are they defining their financial future? 

What Generation am I? 

According to the Pew Research Center, generations allow researchers to examine Americans based on where they are in their life cycle. Placing people into generational cohorts also enables researchers to compare them with other individuals who were born around the same time. Have you ever asked yourself, “What generation am I?” If so, consider the information below. 

  • The Silent Generation was born between 1928 and 1945. They are now age 73 – 90. 
  • The Baby Boomers Generation was born between 1946 and 1964. They are now age 54 – 72. 
  • Generation X was born between 1965 and 1980. They are now age 38 – 53. 
  • Millennials, or Generation Y, were born between 1981 and 1996. They are now age 22 – 37. 
  • Generation Z is representative of anyone born after 1996. 

For those asking themselves, “What is a Millennial?” the information may be a bit surprising. Because of their name alone, many people consider Millennials to be anyone born after 2000. But this is not the case, as researchers classify those individuals as Generation Z. 

The Pew Research Center has decided that 1996 should be the cutoff for the Millennial generation for a few reasons. One, the millennials are now shifting into the middle stages of their adult life. The oldest millennials became adults before today’s 18-year-olds were born. Scientists have access to 16 years of data for the Millennial generation, which is the same span of the previous generation, Generation X. 

When the terrorist attacks of 9/11 occurred, a Millennial would have been between the ages of 5 and 20, meaning they were old enough to understand the significance of the event. They have also been through periods of turmoil and political events that shaped their outlook on life. Controversial wars in Iraq and Afghanistan led to political polarization and a broader view of political parties. 

Millennials were also fundamental to the 2008 election of President Barack Obama. They were between the ages of 12 and 27 when this occurred. The youth vote became an integral component of that election, something that Obama keyed in on, leading to his becoming the first black president of the United States. 

The economic views of many Millennials came as a result of the Great Recession. A majority of the generation attempted to enter the workforce during this time and found difficulty doing so. Their economic outlook on life and financial decisions have been shaped by the recession and will end up impacting society for decades as a result. 

One of the most notable characteristics of millennials, however, is that they are the first generation to be influenced by technology. Millennials were the first to change how people interacted with one another. If Generation X is considered to have grown up when the computer and the cell phone were first introduced, then Generation Y is known for having made by popular. 

By the time most Millennials were teens, they had a connection to the internet not just on the computer, but through smartphones as well. Millennials are responsible for the rapid growth of social media sites like Facebook and Instagram. They are also likely responsible for inventions like Netflix. Millennials helped develop a world of instant communication and on-demand entertainment.  

Millennial Financial Outlook 

The Pew Research Center surveyed roughly 2,000 people at the turn of the decade to analyze the impact that the recent recession, which had just ended, had on members of Generation Y. The survey revealed a few important things about millennials that give great insight into their financial outlooks, which will be fundamental in shaping the economy in coming decades. 

First and foremost, the study revealed that Millennials were hit hardest by the Great Recession. The employment rate for adults 18-24, who were considered Millennials at the time, was 54 percent in 2010. That was the lowest it has ever been for that demographic since the government began logging such statistics in 1948. 

Additionally, there was a 15 percent employment gap between young adults and all working-age adults. This was the most substantial such gap ever recorded in history. Furthermore, young adults at this time had experienced a drop of 6 percent in their weekly earnings. No other demographic saw a slide that significant between 2006 and 2010. 

The study also revealed that the general public perception was that, from a financial standpoint, Millennials had it much more difficult than their parents did. 

  • 82 percent indicated that it was more difficult for Millennials to find a job 
  • 75 percent revealed they thought it was harder for Millennials to save for the future 
  • 71 percent said Millennials had a harder time paying for college 
  • 69 percent said it was more difficult for Millennials to buy a home

The result of all of this dramatically changed the lives of Millennials, both professionally and personally. Nearly half of those polled indicated that they were forced to take a job they otherwise wouldn’t have just to pay the bills. Approximately a quarter of those surveyed said they would have accepted an unpaid position if it meant gaining experience that would one day lead to a job that paid. 

A little over a third of those polled said that they, because of the economy, had gone back to school. Many of them had to take on significantly more debt to do so. Furthermore, nearly a third of Millennials had postponed having children for financial reasons, while a quarter revealed that they were forced to move back in with their parents because of financial difficulties. 

Perhaps the most alarming part of this survey was the data collected regarding household wealth. The typical household headed by someone older than 65 had tenfold the net worth of one led by someone under 35 in 1984. This figure is not surprising. But in 2009, the ratio had jumped from ten times the net worth to 47 times the net worth. 

Millennials are Not Saving for Retirement

The National Institute on Retirement Security recently released very concerning findings regarding Millennials’ retirement plans. The study found that 66% of Millennials had nothing saved for retirement. Even though a company offering retirement options employed two-thirds of Millennials, only half took advantage of such opportunities. 

Of the 34 percent of Millennials that have money saved for retirement, a mere 5 percent save the proper amount. What’s most troubling about this data is the fact that a recession negatively impacted millennials and shaped their viewpoint financially, but they are still not doing anything to overcome it. 

For example, E-Trade Financial found that in 2017, half of Millennials admitted that worrying about their finances proved detrimental to their health. Over half of those polled said that money negatively impacted their relationships. So, if it’s so stressful, why aren’t Millennials saving? 

One of the biggest reasons is because they can’t. Student loan debt is a tremendous problem for Millennials. Many need to take on debt to obtain an undergraduate degree. The debt piles on quickly if they have to explain a post-graduate degree. President of Bone Fide Wealth, Douglas Boneparth, said that Millennials are struggling to achieve the American dream because of student loan debt. 

Furthermore, many do not participate in employee retirement plans because they are not eligible to do so. Two in five Millennials said that they do not qualify for employer-sponsored programs because they do not meet eligibility standards, such as minimum hours-worked requirements each week or month. 

If you’re a Millennial worried about your financial future and retirement options, it’s not too late to begin saving. The first thing you should do is talk to your employer. Discuss what opportunities they offer for retirement, and how you can enroll. If there are eligibility requirements, find out what you need to do to meet them. Be sure to ask about employer matches and default contribution rates as well. 

You should also consider auto-enrolling in a retirement plan. When you auto-enroll in an employer-sponsored plan, the funds are removed from your paycheck each pay period. You can still budget based on the money in your paycheck each week, but you won’t have to worry about transferring your funds into a retirement account. 

The number of Millennials who have success with auto-enrollment plans is staggering. Just over half of Millennials said that they enrolled voluntarily in an employer-sponsored retirement program. But 92 percent said that they participated in an employer-sponsored plan when they have registered automatically. 

If you do not have any savings, you should begin building your account right away. This can be helpful for anything from an emergency to putting a down payment on a new house. Data shows that approximately 70 percent of adults have less than $1,000 in savings, while 34 percent do not have anything saved.

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