Merrill Edge: Millennials Are Self-Directed Savers Thanks to Great Recession

December 5, 2017 — 3:17 PM EST

Nearly a decade after the Great Recession, millennial investors are much more self directed than their older counterparts, and they aren't afraid to save, even if it means sacrificing. Those are among the findings of a new Merrill Edge survey of millennial investors, gauging what they learned after witnessing a recession that wiped out the retirement accounts of millions of Americans, made Bear Stearns and Lehman Brothers things of the past, and ushered in a crash in the real estate market.

According to the survey of 1,010 mass affluent investors -- individuals with investable assets in excess of $250,000 -- aged 18 to 34, Merrill Edge found that millennials have a DIY attitude when it comes to pursuing financial independence. While the older generations feel like they need the hand-holding of an investment advisor, the younger ones are more comfortable going it alone. What's more, millennial investors are much more likely than the older generations to save – and save a lot of money. Of the survey respondents, 66% said that the one thing they can rely on 20 years from now is the savings account that they created on their own. They also have trust in overseeing their own financial stewardship, even more so than they have in their significant other and friends. (See: Why Advisors Should Focus on the Emerging Affluent)

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This group of investors is also more willing to give up day-to-day expenses to save more money for the long haul, with 38% signaling that they save more than half of their paycheck and 54% saying that they would cut back on going out to increase their nest egg. Of the survey respondents, 42% would forgo a vacation for a year to save more. When Merrill Edge polled older investors, the firm found that 71% of Gen Xers say they can rely most on their 401(k) account in 20 years, while 54% of Baby Boomers pointed to pensions and 50% named Social Security as the most reliable thing in their lives.

The Great Recession also affected the way millennials invest their money. Millennials are much more conservative with their investments, with 85% of survey respondents saying they like to play it safe when it comes to day-to-day investments. However, they are riskier in their career, love and travel. Their conservative nature as investors may be partly because they expect another big recession to come, with 80% predicting that it will happen in their lifetime. Three in 10 think it will happen during the next five years.

"This anticipation may be driving millennials to take a conservative approach to their finances as they view themselves as more financially conservative than their parents and even their grandparents," Merrill Edge said in the survey report. "They are not letting the Great Recession or potential future recessions hinder their financial futures." Instead, millennials are feeling more "responsible," "forward-looking" and "successful" compared with the older generations.