Thu, 01 June 2023 | demographics finances
With a possible recession looming and global activism growing, young adults are far more bullish about their ability to change the world than they are about securing their own financial future, according to a report from the TIAA Institute and Business for Impact's AgingWell Hub at Georgetown University.
The report – the Young Adults Personal and World Outlook Survey – surveyed Gen Z and younger millennials, ages 24 to 35.
More than half (56%) feel that they have a role in solving global problems like climate change, social injustice and political division. But when it comes to their finances:
"Many young people are pessimistic about their financial futures. We owe it to them to support their financial wellness and to help them achieve security in retirement so they can continue to change the world well beyond their youth," said Surya Kolluri, head of the TIAA Institute. "About 20% of them turn to social media as a trusted source of information for retirement planning, but there are more proven ways for younger workers to get help. They should seek out financial advisors to craft plans that meet their short- and long-term financial goals. Employee retirement plan sponsors can also help younger workers by automating retirement plan contributions, offering plans with guaranteed lifetime income and by increasing access to financial wellness tools."
The survey also showed some encouraging data:
More than half (54%) expect or want to fully retire at a certain point, and more than one third (36%) say saving for retirement is one of their top three financial goals. Almost three in four young adults (72%) indicate they are saving in a retirement plan – either through their workplace (48%), one that they purchased on their own (13%), or both (11%).
"The sooner young people start saving for retirement, the more their money has time to grow, and the better they'll feel about their financial futures," said Jeanne de Cervens, Director of the AgingWell Hub. "We can't have people this early in their careers resigning themselves to thinking they won't do as well financially as their parents did. We need employers, community groups and others to step up and show young workers how they can plan and get ahead."
The report also found that while more Black Americans currently face financial struggles, they're more likely to be optimistic about the future.
Consider: 50% of Black Americans say they're living paycheck-to-paycheck, compared to 44% of whites.
When asked whether they're securing their financial future, however, 55% of Black Americans said yes, compared to 35% of whites, and 47% of Hispanic/Latinos. Only 6% of Black Americans said they did not expect to ever be able to afford to fully retire, compared to 16% of whites and 11% of Hispanic/Latino young adults.
Hispanic/Latino and Black American young adults are also more likely to save on a regular basis compared to whites (36%, 33% vs 29%).
Women were more pessimistic. While there was little difference in whether the genders said they're living paycheck-to-paycheck, 50% of men said they're securing their financial future (compared to only 30% of women), and 45% of men said they can enjoy life because of the way they're managing their money (compared to 30% of women).
The full report can be found at just www.tiaa.org/public/institute.