HOW MIL­LEN­NI­ALS ARE REWRIT­ING RULES OF FI­NAN­CIAL PLAN­NING

Rather than putting money away for re­tire­ment, young peo­ple are sav­ing so they can af­ford to go where they want and do the job that they de­sire

The National - News - - BUSINESS | MONEY & MARKETS -

If you’ve read the lat­est head­lines, you know mil­len­ni­als get a mixed fi­nan­cial rap. Some re­ports say they are throw­ing their money away on av­o­cado toast and din­ing out, while oth­ers claim they are killing the earn­ings of res­tau­rant chains by cook­ing at home more.

What­ever you be­lieve about their fi­nan­cial habits, some mil­len­ni­als at least are sit­ting on six-fig­ure re­tire­ment ac­counts. In a Fidelity In­vest­ments analysis of 59,000 mil­len­ni­als in the United States – those born be­tween 1981 and 1997 – who have par­tic­i­pated in their com­pany’s 401(k) plan, Amer­ica’s pen­sion scheme, for 10 years, the av­er­age bal­ance was US$109,400 at the end of June 2017.

This isn’t thanks to rich par­ents. These savers can’t all work in in­vest­ment bank­ing. And odds are that at least some have stu­dent loan bal­ances. Rather, the com­mon thread – and the se­cret to a wealthy re­tire­ment – is con­sis­tency.

And there’s a rea­son why they are be­ing con­sis­tent. Ac­cord­ing to a re­port re­leased ear­lier this year by Bank of Amer­ica’s on­line dis­count bro­ker­age, Mer­rill Edge, mil­len­ni­als are the first gen­er­a­tion to plan long-term for fi­nan­cial free­dom over re­tire­ment.

The ma­jor­ity, at 63 per cent, are look­ing to save a set amount of money or in­come nec­es­sary to en­joy their de­sired life­style, com­pared to 55 per cent of Gen Xers and baby boomers who are sav­ing so they can leave the work­force. This younger gen­er­a­tion also have a dif­fer­ent out­look on tra­di­tional life­time mile­stones. When asked about their top life pri­or­i­ties in life, to­day’s 18- to 34-year-olds are more likely than their older coun­ter­parts to fo­cus on per­sonal mile­stones such as work­ing their dream job (42 per cent ver­sus to 23 per cent) and trav­el­ling (37 per cent ver­sus to 21 per cent).

So what is the best way for mil­len­ni­als to achieve those goals along with their ideal of fi­nan­cial in­de­pen­dence in the fu­ture?

Getty Im­ages

Some mil­len­ni­als are sit­ting on six-fig­ure re­tire­ment ac­counts

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