We enjoy categorizing our generations and their saving habits. From the retiring baby boomers to their children, the millennials, there are interesting financial distinctions. Millennials were influenced by their baby boomer parents’ financial troubles and most — 79% — were greatly impacted by the recent 2007-2009 recession. This group watched their parents lose their jobs and savings during the recent recessions.

Catherine Collinson, President of the Transamerica Institute and Transamerica Center for Retirement Studies, surveyed over 1,000 millennials, born between 1979 and 1996. Many millennials entered the workforce during the great recession. Their wise saving habits were positively influenced by hard times during their coming of age. (For more, see: Retirement Savings Tips For 25- To 34-Year-Olds.)

What Distinguishes the Millennials?

Some 74% of the millennials studied work full time and two-thirds have some college education and 57% are single. They are more ethnically diverse than their parents and boast a median estimated household income of $47,000. As would be expected, they are digitally savvy, consume retirement news and products online, and appreciate useful employer workplace apps. Millennials average $27,000 in debt. (For related reading, see: How Financial Advisors Can Adjust to Robo-Advisors.)

Understanding Millennial Savers

Millennials have a different perspective about the future than the baby boomers did during their 20s and 30s. In previous generations, you probably wouldn’t encounter many 22-year-old baby boomers worrying about retirement. Yet, this is the median age that millennial's start saving for retirement. (For related reading, see: Financial Advisors Need to Seek Out This Group NOW.)

This concern about retirement is expressed by the finding that $800,000 is the median estimate they expect to need for retirement. Of the millennials studied, a full 68% believe they’ll be able to retire comfortably.

Some 81% are worried that Social Security won’t be there for them. This fear about lack of a potential government retirement net can be a strong savings motivator. This contrasts with baby boomers who have the certainty of a viable Social Security income stream. (For more, see: 5 Retirement Warning Signs For Millennials.)

These 20- and 30-year-olds are entering the workforce at a time without the traditional pension so common in the middle of the last century. This cohort believes that they will be responsible for funding their own retirement. Thus, when offered, 71% of millennials participate in a company 401(k) retirement plan. Their concern about retirement and saving is further underscored by the finding that 18% of those surveyed discuss money and retirement issues with family and friends.

Several circumstances explain why millennials are motivated to intensify retirement savings. Since millennials face large debt levels, frequently from student loans, and the fact that many first sought work during the recession, they’ve already experienced financial difficulties. In contrast, baby boomers who came of age a generation ago, lacked worries about the availability of Social Security and with lower college education costs, accrued little — if any — student loan debt. (For more, see: What Young People Are Spending Their Money On.)

Millennial Retirement Saving Net Worth

These 20- and 30-year-olds recovered better from the recession than their Gen X and Boomer predecessors, since they had little net worth to lose.

Recent saving efforts catapulted millennial's retirement funds from $9,000 in 2007 to an estimated median level of $32,000 in 2014. Buoyant stock market returns since the end of the recession may have helped this dramatic savings increase. By automating their retirement savings through the workplace retirement plan platform, millennials practiced the wealth building strategy of dollar cost averaging, or investing a set amount at regular intervals. This approach automatically leads to buying more mutual fund shares when prices are lower and fewer at higher prices. (For more, see: The Generation Y Investment Portfolio.)

The Bottom Line

Millennials' savings habits are leaving their Gen X and baby boomer forerunners in the dust. They are taking advantage of employers’ retirement saving benefits and owning their own financial future. Motivated by the recession, high debt levels, and questions about the long term viability of Social Security, this group is showing themselves to be smart financial planners. (For more, see: Money Habits of the Millennial Generation.)

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