The top priority of millennial’s is maintaining their current lifestyle, according to one Manulife survey. About 32 per cent of the generation born after the early 1980s believe they will have enough savings when they retire, despite placing retirement savings near the bottom of their priorities.
Humber student Stuart Weeks, 30, says he doesn’t currently have retirement plans.
“It’s not something we are taught in school but should be. Ideally students should be planning for retirement when they finish high school but instead it seems we are being pushed more towards consumerism,” Weeks says.
Demographic studies show millennials to be an exceptional generation. They are better educated than their predecessors and economically active yet the worst paid and heavily indebted. In order to survive the fragile situation most millennials face after graduation, financial advisors suggest seeking out proper guidance in order to effectively reduce debt and accumulate savings.
According to a study funded by the National Endowment for Financial Education (NEFE), only 22 per cent of millennials have received financial education from an institution or workplace, while 41 per cent have sought at least one form of financial advice in the past five years.
“As soon as students have income they should put 10 per cent of every pay cheque towards retirement and seek out the advice of a portfolio manager,” said Erasto Ramos, senior financial advisor at World Financial Group.
While retirement doesn’t seem to be on the minds of today’s millennials, the Manulife survey found they were three times more likely to consider big-ticket items as their main financial concern.
This might be because, according to the NEFE study, what millennials think they know about financial management is very different from what they actually know. While nearly 70 per cent of participants rated themselves as having high financial knowledge, only eight per cent of college-educated participants answered all financial literacy questions correctly while just 37 per cent correctly answered the most basic of such questions.
A quick internet search will reveal information on every financial topic from credit cards and mortgages to investments and debt management — however, the accuracy and quality of the information is not always good.
“I would encourage young people to start at their home branch where most financial advice is free,” Yelena Pecanac, account management specialist at TD Bank said.
“Breaking down the knowledge barrier is key. I think many millennials want to invest but they don’t know where to start. If millennials want more tailored advice beyond the services of traditional banks there are many options out there, even apps, but they have to take initiative and start asking question.”
Sam Sivarajan, managing director at Manulife Private Wealth, said, “Most millennials are more than 30 years away from retiring so they are setting themselves up for failure if they think they’ll be well-off in retirement, when saving for it isn’t their chief financial concern.
“Millennials should be focused on paying down debt, building their savings and getting into good spending habits if they want to be financially secure in retirement.”