Will Millennials Become a Drain on Society?

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Well, add one more item to the long list of inflation victims. Joining food and gas and about everything else in life is—retirement savings. A high percentage of Americans say staggering inflation has forced them to reduce or stop saving for retirement, and millennials lead the pack.


The information is found in a new survey by Allianz Life which found that 54% of Americans say they’ve cut back on retirement contributions or stopped saving all together.

  • 65% of millennials (born between 1981-1996)
  • 59% of Gen Xers (born between 1965-1980) Other research indicates that Gen X is prioritizing saving for retirement and cutting back in other areas.)
  • 40% of Baby Boomers (born 1946-1964)


The Allianz survey also found that 80% of respondents are worried about rising inflation and its impact on their purchasing power in the next six months, and 75% are worried inflation could hurt their retirement plans.


The idea that Americans have trouble saving for retirement isn’t new. According to Northwestern Mutual’s most recent research, Americans anticipate they’ll need a staggering $1.25 million to afford a comfortable retirement.


Northwestern Mutual data shows that the average retirement savings in America rose from $87,500 in 2020 up to $98,800 in 2021 — before retreating 11%, to $86,869, amid the high inflation and economic turmoil of 2022.


This is not the first time we’ve heard that millennials have a different attitude toward retirement and saving for retirement than other generations. In 2019 I wrote about a survey commissioned by TD Ameritrade concluding that millennials are more likely than either Generation X or Baby Boomers to tap retirement funds for things that have nothing to do with retirement. The survey sampling was 1,015 U.S. adults aged 23 and older with at least $10,000 in investable assets.

  • 53% of millennials said they would draw from retirement savings to spend during a job loss.
  • 52% to cover medical bills.
  • 52% to fund their child’s education.
  • 48% said they’d pull from retirement savings to pay down credit card debt.
  • 47% to buy a house.
  • 45% to cover living expenses during a sabbatical from work.
  • 45% to cover living expenses during parental leave.
  • 45% to make a move.
  • More than 40% said they would take money from retirement funds to buy a car, pay for a vacation, cover wedding expenses or pay down education debt.


Why are millennials so willing to use retirement money now? The nonprofit organization New America published a report showing that 18-to 34-year-olds earn less than the same age group in the 1980s and an irregular flow of income could be why. Researchers found:

  • Freelance and contract work usually does not provide access to employee benefits and contributed to an overall decline in income.
  • Millennials are more likely to be living in poverty than Gen-Xers and Baby Boomers at similar ages.
  • Lower income is causing millennials to delay getting married
  • More millennials are living at home with family.


In fact, a new survey by LendingTree found that 32% of millennials and Gen Zers moved back home with their parents during the pandemic, and two-thirds of those who moved home are still there two years later.


So, what happens if millennials continue the trend of slowing or stopping retirement contributions or if they continue tapping retirement money for non-retirement reasons? What will provide their retirement? One theory is “The Great Wealth Transfer,” the $30 billion currently in the hands of Baby Boomers expected to be passed on to millennial children, which may be more pipe dream than reality.


  • Boomers have record high divorce rates, adding complexity to relationships with adult children, complicating wealth transfer plans, and often producing unplanned costs.
  • For some Boomers, not passing wealth on to adult millennials is retribution for those adult kids deemed underserving, lazy, immature, or just plain irresponsible.
  • And for others, it’s a change of attitude. According to a recent survey from Coventry, more than 75% of over 1,500 respondents are ditching the idea of leaving a nest egg for their family and plan to spend the remainder of their lifetime — and money — making memories, citing a dramatic shift in prioritization from material things to experiences.


But perhaps the biggest reason Baby Boomer wealth won’t be transferred to millennials is longevity. People are living longer. And with longer life spans comes a longer period of spending money, especially on healthcare and long-term care with their own upward spiral of inflation. Healthcare expenses for a couple living in retirement have increased 88% over the last 20 years to an estimated $300,000. Likewise, since 2004, the costs of home care to skilled nursing care have increased between 30% to 60%.


And if millennials have even the slightest thought that Social Security will play a part in their retirement income, think again. The 2022 Social Security Trustees report says the Social Security pool will be empty by 2035. A major contributor to the unsustainability of the current program is that the number of workers contributing to the program is growing more slowly than the number of beneficiaries receiving monthly payments. In 1960, there were 5.1 workers per beneficiary; that number has dropped to 2.8 today. By 2048, when the first millennials reach Social Security Full Retirement Age (FRA) of 67, the current FRA for anyone born in 1960 or after, the ratio of workers to Social Security beneficiaries is predicted to be even smaller.


Which brings us back to the original question: will millennials become a drain on society because of their attitude toward saving for retirement? If you can answer that question, then, as Rudyard Kipling wrote, You’re a better man than I am, Gunga Din!”

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