A recent article in the Wall Street Journal announced that Younger Generation Faces a Savings Deficit. The economy has not been kind to those who left school in the last decade.
Adults under age 35—the so-called millennial generation—currently have a savings rate of negative 2%, meaning they are burning through their assets or going into debt, according to Moody’s Analytics. That compares with a positive savings rate of about 3% for those age 35 to 44, 6% for those 45 to 54, and 13% for those 55 and older.
The recession actually increased everyone’s savings rate. The young are falling behind. One reason is that the cost of higher education has grown much more rapidly that most other services. And it’s becoming increasingly necessary for students to take on debt in order to afford to attend college.
But there is another factor involved. It’s a fact that young people are badly educated about financial issues.
Some, however, have the means to save and invest, but opt not to. Curtis Holland, a 30-year-old software developer in Arlington, Va., has held stable jobs since graduating in 2007, and—unlike the majority of millennials—has a retirement account. But he has avoided other types of investments as “too complicated.”
“I don’t know the risks,” he said. “I don’t know the benefits.”
We wrote a series of posts about the young and their attitude toward investing for the future. They could benefit from sage financial advice if they are willing to seek it. If you are in this group, or know someone who is, please contact us. We may be able to help.