An eye-opening new report says millions of young Americans are not financially ready for retirement and savings aren’t a top priority either.
And if you’re thinking that every 20-something you know on Instagram is splurging on transatlantic vacations these days, you might be right.
That’s according to a recently published survey from financial services company Fidelity, which polled 2,622 adults in mid-February on their retirement planning habits. The survey found that 55% of 18- to 35-year-olds have halted their retirement planning since Covid hit, and 45% of that age group “don’t see a point in saving until things return to normal.”
Rita Assaf, Fidelity’s vice president of retirement products said:
“In the last two years, some people had more cash because they weren’t going out, they weren’t going on vacation. But especially with the market being choppy and [high] inflation, I think this group is just thinking, ‘Why should I build up a retirement plan right now?’”
The trend is partially due to the high cost of living for young people in America right now: student debt, rising housing demand, and 8.6% inflation weigh on people’s minds and wallets, Assaf says.
Overall, Fidelity recommends that younger savers “have time but need to ensure they are making smart retirement decisions.”
Business Insider reported:
And Millennials were already staring at a bleak economic picture pre-pandemic. In 2019, they were dealing with all-time-high student debt, reduced purchasing power, high-priced housing, and skyrocketing healthcare and childcare costs. While their ranks were large, their savings were low — much lower than boomers.
Then, came 2020. Gen Z was hit the hardest by the pandemic, with school, life, jobs, and dating all disrupted. Unemployment was high, and mental health was deteriorating. For millennials, it was yet another recession and road stop amidst 20 years of continual economic pummeling.
More details of this report from DailyWire:
Meanwhile, 31% of Americans — including Next Gen, older Millennials, Gen-Xers, and Boomers — are not sure “how to keep up with inflation” when saving for retirement, and 71% are “very concerned” about the impact of rising price levels on their retirement preparedness.
The Consumer Price Index (CPI) rose 8.6% between May 2021 and May 2022, meaning that inflation has again surpassed record highs. Prices are particularly lofty for energy products such as gasoline, utility gas service, and fuel oil, while food and vehicle prices also continue to soar.
Indeed, 77% of those with a retirement plan reported that they “know what to do to keep up with inflation,” while only 57% of those without a plan said the same, according to the Fidelity survey.
Beyond attitudes about savings in a post-COVID world, another generational shift in retirement planning lies in the use of digital assets. The 2022 Investopedia Financial Literacy Survey recently indicated that 28% of Millennials — those between the ages of 26 and 41 — expect to use cryptocurrencies to support themselves in their retirements. Nearly 20% of Gen Z — those between 18 and 25 — said the same.
“For younger investors, cryptocurrency is clearly not just a fun asset to trade in order to make fast money,” Investopedia editor-in-chief Caleb Silver remarked. “They are depending on generating returns from cryptocurrency to build wealth and fund their retirement, which is concerning given the lack of education around investing in crypto, and the fact it is still not regulated by the industry.”
Bitcoin, the cryptocurrency with the largest market cap, has plummeted from around $48,400 at the end of December to roughly $22,500 as of Tuesday — a 54% drop. Cryptocurrency exchange platform Coinbase is therefore laying off nearly one-fifth of its workforce amid the troubled digital asset market and overall macroeconomic instability.
