Millennials know what they need to do to save for retirement, but that doesn’t mean they are putting that knowledge to work effectively.
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According to the Bank of the West 2018 Millennial Study, 66% of millennials say they’re confident in their ability to use investment vehicles, such as stocks, and the same percentage understand that as younger investors they are able to take more risks with their savings.
However, the same study found that two-thirds of younger Americans still felt more comfortable keeping their cash out of the market altogether.
“Millennials have been stuffing their savings under the mattress instead of putting their income to work through strategic investments,” Ryan Bailey, head of the retail banking group at Bank of the West, said in a statement. “While this may seem safe, they are putting their goals at risk by keeping cash on hand. While they are young, millennials have time on their side and could be missing an opportunity to grow their savings over a lifetime.”
Despite experiencing an unusually lengthy bull market in the years since the financial crisis, 65% of millennial survey respondents say living through that economic downturn has made them much more conservative when it comes to investing.
That has also affected their relationship with common retirement plans. Only 40% of millennials have a workplace retirement plan, like a 401(k), while just 23% have opened an IRA or Roth IRA. Twelve percent of respondents said they had a brokerage account.
But millennials may not be alone when it comes to lagging retirement accounts. A May report from Northwestern Mutual found that 21% of Americans have no retirement savings at all, while two-thirds of people with a savings account or plan are certain their funds will run dry too soon.
The Trump administration and lawmakers are looking to take steps to both make it easier for Americans to save and to incentivize employers to offer retirement plans. The second phase of tax cuts is expected to contain provisions aimed at achieving those goals.