Millennials End Up in Stocks for Head Start on Retirement – Bloomberg 08-04-14

Salient to Investors:

  • The Transamerica Center for Retirement Studies said millennials – born from 1979 to 1996 – began saving for retirement at a median age of 22, versus 27 for Generation X and 35 for baby boomers. 71% of millennials offered 401(k) or similar plans contributed a median 8% of their salaries.
  • Sarah Holden at the Investment Company Institute said millennials were nervous about stocks and were less willing to take risk, but 401(k) plans are keeping them in equities. In 2012, 22% of heads of households younger than 35 owning mutual funds said they would only invest in financial instruments with zero or below-average risk even for a below-average return – more than any other age group except 65 and older.
  • Bankrate.com said 39% of adults aged 18 to 29 said cash was their preferred investment for money not needed for at least 10 years, 3 times the percent that picked the stock market.
  • Jean Young at Vanguard said defined contribution retirement plans, especially those with automatic enrollment or options that reduce risk as an employee ages, is keeping millennials invested in equities despite their risk wants.
  • Alicia Munnell at the Center for Retirement Research said the total effect is positive for the economy because in the long-term, more savings means more investment which means more growth.
  • Social Security’s trust funds will be depleted by 2033, after which tax income would be able to pay 75 percent of scheduled benefits through 2088.
  • Pew Research Center said 51% of millennials do not think there will be any money left in the Social Security system by the time they retire, while 39% said SS will only be able to provide benefits at reduced levels.
  • William Emmons at FRB of St. Louis said millennials have a large amount of student-loan debt but are cutting back on other borrowing, like not buying houses or maxing out credit cards.

 

 

 

Read the full article at http://www.bloomberg.com/news/2014-08-04/millennials-end-up-in-stocks-for-head-start-on-retirement-saving.html

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