Millennials' Finances Improve, but Not Their Optimism: Survey

Millennials today are saving more even as they contend with competing responsibilities and pressures, but are feeling less than optimistic about their futures.

In a survey released Thursday by Bank of America, 73% of millennials said they were saving for life milestones and future goals, a 10 percentage point increase over 2018. Twenty-four percent of those who said they were saving had set aside at least $100,000, up from 16% in 2018 and 8% in 2015.

Three-quarters of savers said they were saving for retirement, while 51% were building an emergency fund and 42% were saving to travel.

Notwithstanding these successes, 51% of millennials in the study said they felt behind in their overall financial situation, including 39% with household incomes of $100,000 or more.

"Whether age 24 or 41, millennials are facing a difficult financial balancing act as they juggle near-term priorities and future goals," Andrew Plepler, global head of environmental, social and governance at Bank of America, said in a statement.

"Older millennials are more secure when it comes to their savings, but many others across this broad age-range still struggle to save at all. Debt remains a pressing challenge with competing pressures making it hard for people to feel financially secure."

BofA's survey, conducted in September using the Ipsos KnowledgePanel, comprised 1,903 respondents, ages 18 to 73.

Despite Getting It Right

The survey found that on average, millennials saving for retirement started to build their nest egg at age 24, whereas Gen Xers were 30 when they started and baby boomers were 33.

Over the past year, 39% of millennials boosted their credit score, 29% secured a raise and 24% saved more for retirement, according to the survey.

In addition, 73% said they preferred to live more frugally in order to plan for the future than "live for today" and spend money when and how they wanted.

But despite their progress, millennials still think they are falling behind.

Forty-three percent said they felt their peers were further ahead in their careers and were making more money.

Seventy-three percent said they were doubtful about their financial future, and 33% worried often about their finances, up from 25% who reported this in 2018.

What would it take to make millennials feel more financially secure? Twenty-six percent overall said they would need $1 million or more — which jumped to 36% for those with household incomes of $100,000 or more.

Juggling Competing Financial Priorities

Even as millennials contend with substantial debt levels, they are also financially preparing for other goals, such as starting a family, buying a home and saving for the future.

The BofA survey found that 76% of millennials carry debt, including 37% with credit card debt and 25% with student loans. Excluding home loans, one in six owed $50,000 or more.

Seventy-six percent of millennials carrying debt said this would keep them from achieving their personal and financial goals: 42% buying a first or nicer home, 40% saving for the future and 21% starting or growing a family.

Ninety percent of this cohort said they were willing to make sacrifices to achieve a financial goal: 70% would cut back on dining out, 35% would eliminate vacations and 21% would downsize their home.

Fifty-seven percent of millennials in the survey said they would rather stay in a less desirable job with a higher salary than take a more desirable one with a lower salary. And 52% said they preferred to work harder today and retire early over working longer and having more free time now.

— Check out How High-Income Millennials Get Advice About Advisors on ThinkAdvisor.