As the price of retirement skyrockets, Millennials have adapted their financial habits to account for this growth.
The average Millennial’s wallet is not only holding less debt than years past but is also hardwired to save, according to a report from Bankrate.
A majority of Millennials are saving more than 5 percent of their pay toward funds for retirement, emergencies or other financial goals — a higher rate than about 50 percent of people ages 30 to 49, according to an article from the Washington Post that analyzed the study.
From the Washington Post about Bankrate’s findings:
The portion of millennials saving the bare minimum, less than 5 percent of their pay, fell to 19 percent this year from 37 percent last year. And the share of people saving more, between 6 percent and 10 percent of their pay, increased to 33 percent this year from 20 percent in 2015.
Millennial retirees will also have to make do with different financial perks than their older counterparts, including smaller pension plans and less generous Social Security benefits. For Millennials without any prior savings, a $1.8 million retirement fund may be more difficult to come by.
From USA Today:
The oldest Millennials, assuming they have no money set aside today and that they earn 5% on their investments, will need to sock away $2,000 a month for 32 years to accumulate a $1.8 million nest egg. And the youngest Millennials would need to save $1,000 a month for 48 years to accumulate $2.4 million.
With the 2 percent inflation rate (the Federal Reserve’s target rate), in about 30 years when older Millennials begin to retire, $1 million will be worth about $530,000. When the younger Millennials begin to retire, the same $1 million will be worth about $386,000, according to USA Today.
“Millennials have a greater inclination toward saving, for both emergencies and retirement, than we’ve seen from previous generations,” Greg McBride, chief financial analyst for Bankrate said in the study’s published findings.
PublicSource released a series of stories diving deeper into the impact of the Millennial generation. Read more about if and when they’re buying homes, what kind of workforce they are and how they’re closing the gender wage gap.
Reach PublicSource intern Sabrina Bodon at email@example.com.