I ran across the chart below while reading an article about retirement plans. It quickly...
Myth Busters: Millennials and Finances
To continue my series on myths in wealth management, I wanted to focus on the millennial generation (those born between1980 and 1996). You know, the whipping boy today of everything that is wrong. The practice of criticizing younger generations is not new. Socrates once wrote, “the children now love luxury. They have bad manners, contempt for authority; they show disrespect for elders and love to chatter in place of exercise.” It is now obvious to me that one of the many things that come with age is, like a rite of passage, the tendency to romanticize how it was when we were young and how bad it is now with the younger generation. With that said, there are also many myths about the ‘next’ generation. Following are 5 of them.
- Millennials have no money. Per the Shullman Research in 2014, 23% of the world’s millionaires are millennials. We should expect that number to grow as, per Alexandra Douwes from The Purpose Generation, the average ages of employee at Facebook, Google, and Apple are 26, 31, and 33, respectfully.
- Millennials Are Lazy. Not only is the average age of employees at some of the fastest growing companies in the world low, there is this myth that they do not work hard. I can tell you from my own experience here at Virtus Wealth Management that this thought is a myth. More importantly, this is backed by a Manpower Group Study that showed 73% of millennials are working more than 40 hours a week. Also, more so than any other generation, millennials are on call now more. They don’t have to be in the office to get work related mail or calls.
- Millennials lack loyalty in the workforce. This simply is not supported by the data. Per a Pew Research Center study in 2016, a higher percent of millennials had worked for 5 or more years at their current employer versus the Gen X generation at the same age.
- Millennials do not want a home. Once again, this is not supported by data. Per a Harvard University Joint Center for Housing Study in 2015, millennials made up the largest share of U.S. home buyers.
- Millennials spend money unwisely. Not only are 86% of millennials saving money, per a Bankrate.com study, they are starting their savings 10 years earlier than any other generation. This isn’t necessarily a conscious choice. For the first time ever, more women between the age of 30 to 34 are getting married for the first time than women between the age of 25-29. * Millennials are marrying later *, having children later *, and even though the gender wage gap still exists it is closing and women are now at 80% of men’s pay compared to 70% on 1990 and even 60% in 1960.** Thus, there is more disposable income to save at an early age..
That is the good news. Our country is not doomed due to the younger generation. There is a key piece of bad news though. Even though millennials are saving more now and are expected to inherit trillions of dollars from the baby boomer generations, more than 60% lack the confidence that they have the knowledge to invest wisely per a Capital One 2016 study. We, the baby boomer generation, need to do a better job preparing the younger generation in regards to investing.
*Pew Research Center Annual Social and Economic Survey.
** Institute For Women’s Policy Research, The Gender Wage Gap: 2016; Earnings Differences by Gender, Race, and Ethnicity.