How can millennials achieve financial wellness?
As we learned in our 2018 financial stress survey,¹ far more millennials report feeling financially stressed than baby boomers do, and they spend more time than older workers worrying about personal finances at work. How can millennials save for retirement when they're struggling with debt and basic expenses?
Millennials are under considerable financial stress. They have substantial college debt and are getting married and buying homes later than their parents did.² According to the U.S. Federal Reserve, student loan debt is a significant contributor to the lack of home ownership among millennials.² How can this generation save for retirement when they're struggling with debt and basic expenses?
TBH financial wellness is elusive
Seventy-eight percent of millennials report experiencing financial stress. Much of the stress is caused by student loan debt, as 42% of millennials in our retirement plans are paying off student loans. Two-thirds say their level of debt, including credit card debt, is a problem. When asked what’s keeping them from saving for retirement, their top answers are:
• Poor spending habits
• Credit card debt
• Student loan debt
• Saving for a house
Half of millennials wouldn’t be able to cover a $2,000 emergency with cash, and 28% have no emergency savings. The most prevalent financial worries among millennials are:
• Paying off student loans
• Emergency savings level
• Current financial situation
• Monthly rent payments
• Day-to-day bills
Recognizing they could benefit from some advice, millennials would like help with:
• Purchasing a home
It’s time for financial goals
With access to personal technology since they were children, millennials have revolutionized industries as they've used them. When they were young, they helped change the way we listen to music, with Spotify, Pandora, and Apple Music. Then came movies, ride sharing, and vacation rentals—and they do it all in the palm of their hand.
When it comes to getting financial advice, however, this generation isn't opposed to going old school. Although they have a slight preference for online advice over in-person advice, it’s a surprisingly close race. Despite their heavy use of social media, they don't turn to that channel for help with financial issues; instead, they expect financial wellness help from their employer. So even though technology-based solutions have appeal, the personal touch and advice from a trusted source—such as an employer—need to be part of the solution.
Employers and financial professionals can help millennials by providing a holistic approach to finances. For millennials to be able to save for retirement, they need help prioritizing the short-term expenses—rent and student loan payments—and medium-term goals—emergency savings and saving for a house.
Just as the baby boomers did before them, millennials have upended the industries they come in contact with. Think of the changes we’ve experienced over the last decade, from music to lodging and transportation—revolutionizing the basic financial model from ownership to pay-as-you-go. While part of it is certainly due to their tech savvy, we can’t help but wonder how much is due to their financial situation. If we can help them crack the financial wellness code, there’s no telling what industry they’ll change next.
Please click here to view our latest financial stress survey. To find out how our financial wellness resources can complement your own approach, please check out our participant experience or contact your John Hancock representative.
1 Unless otherwise noted, all statistics cited are from John Hancock’s fifth annual financial stress survey, John Hancock, Greenwald & Associates, June 2018. A survey of more than 1,300 workers to learn more about individual stress levels, their causes and effects, and strategies for relief. 2 "Heavy Student Loan Debt Forces Many Millennials to Delay Buying Homes," National Public Radio, 2/1/19.
The content of this document is for general information only and is believed to be accurate and reliable as of posting date, but may be subject to change. John Hancock does not provide investment, tax, or legal advice. Please consult your own independent advisor as to any investment, tax, or legal statements made herein.
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