- Millennials began saving for retirement in their 20s, whereas previous generations waited until their 30s, according to a new Bank of America report.
- But even with that head start, millennials still have less wealth than their parents did at their age.
- The Great Recession may have turned millennials into savers, but it also left them financially behind.
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Contrary to popular belief, millennials are pretty good at trying to save money.
That’s according to Bank of America’s latest Better Money Habits report, which found that millennials began saving for retirement earlier than previous generations did. On average, the study notes, millennials started saving for retirement at age 24, whereas Gen X began at age 30 and baby boomers began at age 33.
To compile the results, the report surveyed 1,903 Americans ages 18 to 73, defining millennial respondents as those ages 24 to 41.
Nearly three-quarters of millennial respondents (73%) said they’re saving, with 48% doing so monthly. Of those saving, 75% are doing so for retirement, more than half (51%) are building an emergency fund, and one-third (32%) are saving to buy a home.
Many of these millennials, according to the survey, have a good chunk of money tucked away. Almost a quarter have $US100,000 or more saved, while 59% have $US15,000 or more saved. It all sounds like a decent recipe to build wealth, but there’s one major problem: Millennials still have less wealth than their parents did at that age.
Millennials are financially behind
Several studies have revealed just how far behind millennials are in wealth building.
The net worth of the average American millennial is less than $US8,000, according to one Deloitte study, which also found that the net worth of Americans ages 18 to 35 has decreased by 34% since 1996. And a paper by The Brookings Institution found that median household wealth was roughly 25% lower for those ages 20 to 35 in 2016 than it was for the same age group in 2007.
It goes to show the toll of economic forces: Millennials are saddled with student-loan debt, and skyrocketing living costs are outpacing wages. Millennials earn 20% less than baby boomers did at their age, according to a new report by think tank New America.
They can largely thank the Great Recession for that – older millennials who graduated into the financial crisis dealt with a tough job market and wage stagnation, making it difficult to save. But, by watching the recession unfold, younger millennials became more aware of the risks of a bad economy.
This has caused them to be more practical when it comes to money, from saving for emergencies to contributing to a retirement account, generational expert Jason Dorsey previously told Business Insider.
It’s a double-edged sword: The fallout of the recession has fuelled millennials’ good savings habits, but it’s also made it harder for them to turn those savings into significant wealth.