The question about where and when to invest is one which weighs heavily upon the minds of many millennial. As the economy continues to fluctuate and take unexpected dips, there is the potential for true growth if approached in the right manner at the right time.

saving for retirement

Are Millennials saving for retirement? 

Overwhelmingly millennial have not been saving at the rate of their predecessors. Even though they tend to save about 10% of their income, a rate higher than Gen X and Baby Boomers, they struggle to maintain such savings to do high amounts of debt.  Many Millennials have chosen to either avoid saving all together for retirement, or have dipped into their savings to care for more immediate expenses.

This has only been exacerbated by the recession in 2008 and now again with the Covid-19 pandemic leading to even more insecurities in the market. Many have chosen to use savings to meet the needs of now, to pay for housing, food, and other immediate needs which are not being met through their paycheck.

Millennials are set to have one of the worst retirements when compared to Gen X and Baby Boomers. There are many causes for this phenomenon; but some primary causes seem to be that millennials entered the world at a bad time, and accumulated huge amounts of school debt with the promise of a better future.

This has the potential of creating some very insecure futures for this generation.

How do Millennials view the economic situation?

Having entered the economy during the great recession, many millennials are not overly optimistic about the potential economic future. Additionally, many are not hopeful about the prospects of Social Security being around when the time comes for them to retire, and therefore do not believe their prospects for a smooth retirement are likely.

The prospects of high paying jobs have decreased over the years, with more and more millennials getting college degrees than any generation before them, yet the opportunities for a living wage has decreased. As a result, a lot of millennials have dipped into their retirement savings to pay for necessities now.

Overall, millennials have not invested in the traditional ways, such as the stock market or retirement plans, having viewed their circumstances as different from those before them and adjusting their expectations accordingly.

Are Millennials optimistic about the future?

Millennials tend to be pessimistic about the future, viewing hard work as important but seeing little payoff in return. One illustration of this fact is the amount many millennials have invested in higher education, and completed college in comparison to gen x and baby boomers, and yet still struggle to find a job which allows them to pay bills and save for the future.

Many millennials don’t feel confident about opening their own businesses, either. Due to the economic insecurities of the early 2000’s there’s a lot of doubt about the future prospects of a business when the economy seems insecure. Rather, millennials tend to go the more traditional route of attempting to climb the company ladder.

Millennials are cynical about the establishment, however, and do not believe the system has enabled them to succeed in the way it did for their parents. They tend to favor methods which don’t stick strictly to traditional views about economics and what “works” versus what has not been tried yet. They feel more open to views which were previously dismissed.

Should Millennials invest in real estate?

Millennials favor real estate investments over many other traditional methods of investments. Even Though they do invest on average 10% in 401ks, millennials do not favor other methods of retirement investing such as the stock market.  In comparison to gen x and baby boomers, they prefer a more solid investment in rental real estate.

Despite this fact, however, millennials are very unlikely to view investing in a personal house for themselves to be wise. They tend to prefer renting cheaper apartments for themselves and renting homes which pay for themselves and then some in rent.

This is actually a sound and solid investment, as it is more solid and less volatile than other investments.  It’s an excellent source of passive income, and adds a level of security and flexibility to one’s revenue.

The only struggle for real estate investing is it requires a considerable income to qualify for a loan to purchase a home. This one of the setbacks for millennials seeking to liberate themselves from debt, as their debt is often the thing which makes them ineligible for a loan.

Should Millennials invest in crypto currency?

Crypto currency is volatile; however, it serves to give tremendous returns when the market goes well. Although, it’s a new market and there’s a lot which has yet to be learned about how it works and will continue to grow, cryptocurrencies such as bitcoin have already proven a worthwhile investment.

Crypto also avoids the issues faced with investors without much collateral or investment power, so they can invest what money they have in this currently thriving market. Millennials have flocked to this unorthodox currency in part because of their suspicion of the stock market and traditional American money.

They are skeptical of the American dollar, and are nervous to put their full faith in a currency which has nothing but the government backing it, and has proven to be vulnerable due to inflation.

Of course, there are risks associated with investing in crypto as it is a volunteer-based currency which in some ways is still seeking validation. Although, many will present the rebuttal that American money is not backed by any real collateral, and is susceptible to the fluctuating world economy. This, and the fact that if you invest at the right time, you can turn a good profit, has attracted many millennial investors.

The Millennial Mind

Now the question remains, what deep down inside creates the economic and employment environment of the millennial? Gallup performed an intense survey of millennials and their perspectives on work, life and what it is they desire out of their work. In turn, they reflect upon what the employer might do to attract and keep the millennial as an employee.

One heavy driver is the search for purpose and fulfillment at work. Millennials are 10-15% more likely to state they seek personal growth, fulfillment and development as a primary driver of their career search. Millennials seek more from their job than their predecessors.

Millennials are not engaged at their work, since they do not feel fully committed or inspired by the work they are currently performing. Most millennials, when polled, responded they do not feel committed to their work because it fails to meet their desires for fulfillment and challenge. Rather, work is simply something which pays their bills. It has been estimated that this lack of commitment and engagement costs the US market over $30 billion in losses.

Previously, a paycheck was sufficient to attract and keep employees at a company. For millennials, however, this is not sufficient. Employers must advertise their ability to challenge their employees and offer avenues of advancement and achievement in order to not only get a millennial as an employee, but also to keep them. Most millennials have stated they plan upon leaving their current jobs in the next 12 months.

Although this has a good side to it, as it shows people are seeking more than just compensation for their work, it also creates a level of instability. This has slowed millennials down in their advancement in life in comparison to those before them. Thus, they do not seek long term commitments in marriage, in houses, or other “normal” adult activities. This mindset is both courageous and unsettling as it changes the dynamics of life, family and society.

Simply stated, millennials are the most educated of all the generations before them. Upon successful completion of their degrees, they know they want more than just a career to count as a payoff for all they have spent on their degree. They know they have options and are not eager to enter into a long-term commitment with their career. Rather, they will wait until the desired job crosses their path.