Among Millennials, you’re considered a financial success as long as you’re not in debt.
That’s according to research published by Facebook this year.
The company analyzed conversations by U.S.-based Millennials on its platform and found that over half of those observed considered having no debt a financial success.
Only one in 10 said that being able to retire was an indicator of success.
This data is a perfect representation of the economic environment within which my peers and I reside. Who can think about saving for the future when you’re struggling to get out of the red?
Graduating from high school and college in the midst of the Great Recession has left us underemployed with stagnant wages, and mountains of student loans. The average income of people aged 25 to 34 in 2014 was only around $32,000 for women and around $45,000 for men, according to the U.S. Census Bureau.
We can’t buy houses, we can’t afford kids, and we don’t want to get married because we don’t want to combine our debts.
Yet, Millennials are many financial commentators’ favorite group to chastise for not investing or saving for retirement.
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Just last week my colleague at Wall Street Daily reported on a survey from Google that showed 42% of Millennials hadn’t saved anything for their retirement. The article ended with a plea and tips for my generation to start saving.
Last year, a report from the Federal Reserve had Neal Frankle from Wealth Pilgrim in a panic:
“The Federal Reserve just came out with a study indicating that less than 7% of households led by people who are 35 or younger own any equity funds or stocks. What that tells me is that young people are not putting money aside for their future. What are they going to do when they reach retirement? This question scares the daylights out of me. Just to give you a sense of proportion, that investing participation rate was 30% back in 1963.”
Certainly, a generation unable to support themselves in old age is a frightening economic prospect.
Those who don’t save enough for retirement will have to either keep working into their 70s and 80s, or rely on the social safety net, which won’t be able to provide a standard of living most working people are accustomed to, says Sol Halpern of Highlander – A mindful finance company.
But, as well-intentioned as the popular advice is, intention isn’t enough to break through the tangible and perceived barriers Millennials are working with.
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Company-sponsored 401(k)s are becoming scarcer and less generous as more people find work at startups and small businesses. Much of the responsibility falls heavily on the individual, which of course makes things difficult given the current state of employment and stagnant wages.
Retirement seems very far away for many of us, especially when budgets are so tight.
Many of my peers are deep in the red, and they feel it’s better to use any extra money they can save to pay down debt.
I’m certainly an advocate for automatic deductions into savings accounts. Even small amounts on a regular basis can make a difference.
Still, I’ve only experienced a small amount of debt in comparison to some of my peers. But, I can imagine how large student loans and credit card debt must feel like overwhelming, heavy wet blankets that need to be thrown off as soon as possible, so that “real life” can begin.
In addition, Millennials are wary of the stock market and anything labeled as an investment.
We’ve seen two recessions. The 2008 financial collapse was particularly vivid as many of us were just preparing to leave the education sphere and get jobs for the first time. Some of us saw our parents struggle, and many had moved in with them because we couldn’t find jobs. We read articles, watched documentaries, and experienced social movements all blaming large investment firms for the crash.
It’s incredibly disheartening considering we were all taught that education is the key to success – only to have student loans drag us down and hold us back so early on in our lifetime.
However, some financial writers are taking the contrarian view to the state of Millennial wealth.
Allison Schrager of Quartz.com recently pointed out that Millennials may not be that different from young people of generations past.
She highlights a study from 1994 by Stanford University economist Orazio Attanasio, who found that “most people [at that time] only start accumulating serious assets late into middle age when their salaries are at their highest and they have fewer financial pressures.”
“At the rate they are going, millennials are actually better savers than their parents,” writes Schrager. According to data from the Federal Reserve’s Survey of Consumer Finances, in 1989 only 31% of 23 to 34 year olds had any retirement savings; by 2013, 44% did.”
Like the economy, perhaps Millennials just need a little more time to recover.