Last week Elite Daily ran a viral piece titled, “If You Have Savings in Your 20s, You’re Doing Something Wrong.” The essay gives tempting advice: enjoy life, spend while you’re young, and don’t save for the future.
The article has generated heated responses from many. Luckily, most millennials aren’t following Elite Daily’s advice. According to a TransAmerica survey of a nationally representative sample of U.S. workers, Millennials are actually starting to save earlier than previous generations. While the median Generation X worker reported only beginning to save for retirement at age 27 and Baby Boomers at age 35, Millennials started saving at an early, unprecedented age 22. While participation rates are lower than older generations, still, the majority of Millennials are saving for retirement. Seven out of 10 Millennials have already started saving for retirement. Vanguard and Bank of America Merrill Lynch client surveys report similarly high participation rates for its 401k plans.
Millennials Are Starting to Save for Retirement Earlier:
Participation Rates in an Employer-Sponsored Retirement Plan and/or Outside Retirement Savings (percent)
Source: TransAmerica, “Millennial Workers: An Emerging Generation of Super Savers,” 2014. Based on a nationally representative sample of 4,143 workers.
Moreover, Millennials are not just participating at high rates, they’re also setting aside real money. Those who participate in a 401k or similar plan contribute 8 percent of their salary—one percentage point higher than Generation X.
Given the overall poor savings habits of many Americans, we should celebrate, not criticize, the fact that many younger workers are doing a decent job of starting to save. Who says that Millennials can’t feel like they’re 22 and be savvy at saving, too?
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