Generation Y Workers Growing Up; Optimistic for the Future
The Principal shares the latest findings from millennial workers
With financial security as passion number one and saving for retirement topping the list of financial goals, Gen Y workers are making plans for a brighter financial future according to new research from the Principal Financial Group®.
When setting financial goals, saving for retirement came out on top for millennial workers (63 percent) followed by paying off student loans (48 percent) and paying down credit card debt (42 percent). These younger workers report taking action and positive strides towards making their goals a reality. Eighty percent say they have a monthly budget and two-thirds have established an emergency savings fund.
The Principal Knowledge Center surveyed retirement plan participants ages 18-34 as part of a company initiative, which focuses specifically on this generational segment.
"Millennial workers are clearly growing up and taking responsibility with a passion and keen focus on their financial future. As the second largest generation to the boomers and in control of more than $2 trillion in assets, these workers have very quickly become an important group to watch," said Greg Burrows, senior vice president of retirement and investor services for The Principal®. "This generation has seen parents cope with the recession and the impact of not saving enough. Based on those experiences, they are realistic about the challenges ahead, but optimistic because they plan to take charge of their own retirement nest egg."
The majority of millennials (58 percent) say Social Security benefits will no longer exist by the time they reach retirement age, while another quarter of those surveyed believe Social Security will be around but with reduced benefits. Even without the help of the government, Gen Y workers (79 percent) feel confident they will be better off financially when they reach their parents' current age.
Saving Earlier, Working Later
Almost two-thirds (65 percent) of those responding began saving for retirement at age 25, yet even by starting early, nearly two-thirds (63 percent) plan to retire after age 65. Another quarter (22 percent) plan on retiring between ages 60-65. Even though they have started early, nearly half of those responding (44 percent) have not calculated the amount of money needed to retire or do not have a set goal. For those with a set goal, over a third (34 percent) want to save $1 million or more.
"While there seems to be a general sense that our generation isn't being realistic about their financial future, this research shows we are savvy when it comes to money and investing. We've started saving earlier than past generations and recognize we may need to work longer in order to meet our financial goals," said Jase Johnson, voice of the young consumer senior business strategist for The Principal. "One way for Gen Y to stay on track is by creating a financial plan and a calculated retirement income and savings goal."
Putting a Price on American Dream
In order to achieve the American Dream, Gen Y workers estimate it will cost $3.1 million in today's dollars. According to Gen Y workers, their version of the American Dream includes being financially secure (77 percent), having freedom (64 percent) and owning their own home (63 percent). Financial independence, marriage, and children top their list of dreams, followed by having a career and starting a family.
Reaching Younger Consumers
The voice of the young consumer initiative at The Principal is a multi-generational team of employees charged with identifying new ways to reach the evolving consumer. They accomplish this through a collaborative partnership with leaders and employees at The Principal. In addition, the team shares knowledge with employees of The Principal on evolving Gen Y consumer and employee habits and identifies challenges evolving consumers face with financial services. This research helps inform this initiative.
This Principal Financial Group Gen Y study was conducted online within the United States between September 9 and September 18, 2013 among 591 employees. Ages for participants ranged from 18-34. Those participating in the survey work for a company that currently has a workplace retirement plan with the Principal Financial Group.
About the Principal Financial Group
The Principal Financial Group® (The Principal ®)1 is a global investment management leader offering retirement services, insurance solutions and asset management. The Principal offers businesses, individuals and institutional clients a wide range of financial products and services, including retirement, asset management and insurance through its diverse family of financial services companies. Founded in 1879 and a member of the FORTUNE 500®, the Principal Financial Group has $483.2 billion in assets under management2 and serves some 19.4 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit www.principal.com.
1 "The Principal Financial Group" and "The Principal" are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.
2 As of December 31, 2013.