The Young Aren't Saving Enough
A recent study by Edward Jones shows that young adults in the US (ages 18 to 24) want to retire earlier than other generations at the age of 61. A very lofty goal given medical technology will likely see them live even longer than previous generations.
But lofty goals aren’t so much the problem as they are young and have plenty of time to execute their plans. The issue is they are focused on other priorities.
The same study suggests that around 30% are planning for a family (which is more expensive adjusted for inflation than it was in their parent’s time), 28% are focusing on being responsible with everyday expenses, and just 23% want to invest.
Another issue is that: only 12% of young investors discuss their finances with a trusted advisor. This isn’t unique to them as many people still believe they need a certain level of income or savings to even work with an advisor - something that isn’t true for most. Getting people started, and getting them on the right path is something we do far more than managing large sums of money for people already at a certain point.
I believe my industry is often failing at providing this generation with targeted and credible information. We’re competing with slick online sources that often sell the idea they have some special insight. It doesn’t help that schools still don’t teach anything close to the basics of personal finance and that the internet is flooded with unqualified, inexperienced gurus selling trading platforms and stories of getting rich quickly.
And while some in my age group and above might dismiss them as being glued to smartphones or wasteful with their income, most of them face much bigger hurdles than the prior generation or two. Buying an average home in the 1970s in most developed economies cost around 3-4 times the average annual income - so even high-interest rates were not that big a barrier. Today similar homes start at around 8 times the average annual income or more. It’s not a valid criticism to say if they stopped buying lattes or cancelled Netflix they would be able to buy the homes their parents or grandparents did.
This makes their retirement goals even more lofty - but that’s a great thing that so many young adults want to be financially free earlier than the previous generations- what’s not so great is they aren’t sitting with credible and qualified sources of information to plan that out. They need guidance as much as any other generation, in a harder economic environment. The question is - how are we going to give it to them?
If this article was interesting consider supporting my work by sharing it over your social media or with friends you think can benefit from it. Thank you.