Most Millennials Don’t Believe They Can Accumulate $1 Million
(Photo: Flickr, Creative Commons)
A new survey from Wells Fargo suggests that close to two-thirds of millennials believe that throughout their entire lifetime, they will never accumulate $ 1 million in savings.
The Wells Fargo Millennial Survey found that a total of 64% of participants did not think they would be able to save $ 1 million. Meanwhile, 59% said they have started to save for retirement, in comparison with 41% who said they had not yet begun to save. Of those who said they are not saving for retirement, 64% believe they are “not making enough money to save for retirement.”
“Saving $ 1 million is often noted as a nest-egg target to help fund a multi-decade retirement, so we wanted to find out if today’s millennials think they can get there. A majority don’t think so. Millennials may not realize that if they start saving consistently by their mid-twenties — and stay invested for the duration of their working years — they will likely accumulate $ 1 million by the time they retire,” said Joe Ready, director of Institutional Retirement and Trust for Wells Fargo.
Ready notes that it is possible for a millennial to save a total of $ 1 million throughout his or her lifetime. With earning a starting salary of $ 32,000 by age 25, if 5% of that was saved in the first year, increasing by 2% each year until a total of 13% was reached, that person would have $ 1 million by age 65. However, that assumes the earner is receiving a 2% increase in salary each year, is invested in the market, and has a 7% return on their invested assets. Ready stresses the importance of starting to save early in life, saying this can be started early on by reducing discretionary spending by $ 26 each week and putting that into a 401(k) plan beginning at age 25.
Of the survey participants who do not believe it possible to save $ 1 million throughout their lives, the average personal income was found to be $ 27,900. Of those who said they would not be able to save $ 1 million but have started to save for retirement, 37% put away more than 5% of their income, while 7% said they were putting away more than 10%.
“Almost half of the group who don’t think they can reach $ 1 million have already started saving; this group is on the right track in terms of already developing strong savings habits. The path to creating a sizeable nest egg is more achievable than many millennials might realize,” said Ready.
Meanwhile, of the group who do expect to be able to save $ 1 million, the average personal income reported was found to be $ 53,000. In all, 77% have started to save for retirement, with two-thirds putting aside 5% of their income and 28% saving more than 10%.
The survey also found that 34% of millennials carry an average of $ 19,978 in student loan debt. A total of 75% of those who have such debt felt it to be “unmanageable.” However, of this group, 70% are saving for retirement at an average rate of 5.5%.
Conducted by GfK, the survey included over 1,000 US adults between the ages of 22 and 35. An oversample of 500 Hispanic millennials was obtained for comparison purposes.
Author information
The post Most Millennials Don’t Believe They Can Accumulate $ 1 Million appeared first on Education News.
Comments are closed.