Millennials are way more optimistic than Baby Boomers.
In fact, the younger generation has never been more optimistic about the future than older people. According to a chart shared by Deutsche Bank’s Chief International Economist Torsten Sløk, the difference in consumer confidence between Americans younger than 35 and those older than 55 is at a record high.
Sløk attributes this optimism to two key things. First, he notes, millennials have less debt than the older generation. And second, the unemployment situation for young people compared to that of older people is better than it has been in years.
“With the economic expansion currently broadening out to produce more and more low and middle-income jobs the overall outlook for the young generation is good,” Sløk wrote in the note to clients.
However, there’s another interesting thing to consider that Sløk doesn’t touch on: millennials are way farther away from retirement than Baby Boomers.
In other words, as Baby Boomers get closer to retirement, they may be becoming more aware of the financial challenges they will face. On the flip side, millennials (theoretically) have a longer horizon, and some still have a “false sense of security” around their savings.
Notably, a recent survey from Insured Retirement Institute found that only 24% of Baby Boomer respondents were confident they will have enough money to last through their lifetimes — the lowest percentage since the group started conducting the survey in 2011, and that number was 37%.
“People are becoming much more aware of the challenges they’re going to face in retirement, because, really, their preparedness hasn’t changed a whole lot but their confidence has — it’s dropped significantly, which could be seen as a good thing,” Jamie Hopkins, a professor of taxation at the American College, told Financial Planning.
“It would be seen as a good thing if we actually saw people having better offsetting behaviours. Unfortunately, we haven’t seen that yet.”