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Merrill Edge® Report Finds Millennials More Confident and Conservative as They Take Saving Into Their Own Hands

Uniquely shaped by their coming-of-age during the Great Recession a decade ago, millennials demonstrate a “do-it-myself” mindset as they continue to pursue financial independence and self-sufficiency. According to the latest Merrill Edge® Report, when asked what they’ll be able to rely on in 20 years, millennials’ top response was their savings account (66 percent) – a self-created and self-funded source. In fact, millennials place greater trust in their own stewardship than they do in their personal relationships with their significant other (57 percent) and friends (56 percent). Their do-it-myself (DIM) mindset is evident in their willingness to save a significant portion of their paycheck; 38 percent of millennials say they are willing to save more than 50 percent of their own paycheck to have more money in the long run.

In sharp contrast, older generations are more likely to depend on outside sources for their financial security, such as employer- or government-funded accounts. For Gen Xers, this means relying on a 401(k) account (71 percent), while baby boomers are more likely to rely on pensions (54 percent) and Social Security (50 percent).

The survey of more than 1,000 mass affluent Americans, conducted between September 6 and September 24, shows the effects of the Great Recession don’t deter millennials from taking control of their financial future. Instead, this younger generation is willing to take matters into their own hands by making sacrificial spending decisions and delaying life milestones to have more money in the long run. The decisions and delays include:

• Cutting back on going out (54 percent).
• Skipping vacation for a year (42 percent).
• Delaying buying a house (36 percent).
• Postponing getting married or having children (33 percent).

This proactive and deliberate planning appears to manifest itself as conservatism for younger Americans. After witnessing the fallout of the years following the recession and the effects it had on their older generational counterparts, millennials are more likely to “play it safe” with their day-to-day investments (85 percent), more so than other aspects of their life, including their career (80 percent), romantic life (73 percent) and travel (55 percent). The report also found millennials are most likely to see themselves as financially conservative compared to others, including their parents (46 percent) and grandparents (35 percent).

Recession lessons

Nearly 10 years later, the Great Recession continues to play a major role in how younger generations plan for life milestones. In fact, most millennials say the Great Recession still plays a role in their decision-making process when buying real estate (78 percent), pursuing education (58 percent) and having children (53 percent).

Younger adults also acknowledge the potential for trouble in the future. Eighty percent of millennials say they’ll see another recession in their lifetime, with three in 10 thinking it will happen in the next five years.

Despite their fiscally conservative nature following the recession, millennials aren’t letting its aftereffects hinder their financial future. When it comes to their future financial decisions, the report found millennials are feeling more “responsible” (64 percent, compared to 54 percent of other generations), “forward-looking” (64 percent, compared to 52 percent of other generations) and “successful” (54 percent, compared to 48 percent of other generations).

“As we observe how Americans look at their financial future, younger generations continue to rewrite the rules for the rest of us,” said Aron Levine, head of Merrill Edge. “We’re excited to see this group take financial matters into their own hands by becoming increasingly self-motivated and financially savvy. By being more conservative with their money now, they’re looking to seize the financial future they desire in the long term.”

Technology and flexibility guiding investing habits and sense of responsibility

When it comes to their day-to-day finances, it’s no surprise Americans have an app to help them manage their lifestyles, including everything from investment accounts to splitting the check when dining out with friends. In fact, 44 percent of Americans manage their everyday banking on a mobile device at least once a week, while just 10 percent do so at a bank or financial center in person. Even more do so on a computer, as 57 percent of respondents manage day-to-day finances online every week.

Digital platforms demonstrate the growing propensity for Americans to rely on technology for flexibility and independence. Twenty percent of Americans check their investments and the market through their mobile devices each week, while only 6 percent of all Americans do so by visiting a bank branch.

This reliance on their own financial monitoring on the go appears to be leading Americans to feel more confident about their investment approach than they did 10 years ago:

• 47 percent say they are more vigilant.
• 45 percent say they are more confident.
• 45 percent say they are more secure.
• 42 percent say they are more proactive.

Making a difference means more than having a million dollars in the bank

Americans overall are redefining the idea of “success,” and are moving from an earning potential concept toward their ability to make a positive impact on their communities and families. The report found making a difference in the lives of those in need is viewed as essential to the definition of success by four times (41 percent) as many respondents as being a millionaire (9 percent).

In addition to prioritizing community support, Americans are taking a “family-first” approach to the idea of achievement. According to the report, 73 percent say providing for family is the most essential definition to their success, closely followed by having a family (52 percent). About the same number of Americans think being able to provide for their family is essential to wealth, and 40 percent say the ability to give back is crucial.

As finances become more of a family affair, 80 percent of Americans are making day-to-day financial and spending decisions on behalf of their family members. Many also provide input on life priorities to their families, such as health (80 percent), travel (78 percent) and housing decisions (75 percent).

As Americans look to the future, the majority even plan to emulate their parents by following in their elders’ footsteps (47 percent) versus learning from their mistakes (41 percent).

A confident, bright future lies ahead

Americans appear unified in thinking success and wealth are in the cards for them. Ninety-six percent deem success attainable, with 52 percent considering themselves successful already and 44 percent thinking they will be in the future. Many even take it a step further, as 54 percent think they will be wealthy during their lifetime, including 8 percent who already consider themselves wealthy.

Respondents are also feeling more optimistic about their investment habits than they were 10 years ago, with 48 percent feeling more successful, 45 percent feeling more confident and 42 percent feeling more proactive.

“We’ve learned a lot since the Great Recession and its monumental aftereffects in the way Americans think about their finances,” said David Poole, head of Merrill Edge Advisory and Client Services. “What’s most important is that Americans, especially the younger generation, are feeling optimistic about what’s ahead, so their conservative approach may pay dividends in the long run. With success and wealth well within reach for our customers, expanding our ability to deliver our products and services to clients when, where and how they want is driving our philosophy of simplified investing for the future.”

For more in-depth information about the financial behaviors and priorities of mass affluent Americans, read the entire fall 2017 Merrill Edge Report here. A complementing infographic is available here.

Merrill Edge Survey MethodologyConvergys (an independent market research company) conducted a nationally representative, panel-sample online survey on behalf of Merrill Edge Sept. 6-24, 2017. The survey consisted of 1,010 mass affluent respondents throughout the U.S. Respondents in the study were defined as aged 18 to 34 (millennials) with investable assets between $50,000 and $250,000 or those aged 18 to 34 who have investable assets between $20,000 and $50,000 with an annual income of at least $50,000; or aged 35-plus with investable assets between $50,000 and $250,000. For this purpose, investable assets consist of the value of all cash, savings, mutual funds, CDs, IRAs, stocks, bonds and all other types of investments excluding primary home and other real estate investments. We conducted an oversampling of 300 mass affluents in the following markets: Southern California, Dallas, Chicago, Atlanta, and Phoenix. An additional group of 205 Generation Z respondents was surveyed. The margin of error is +/- 3.1 percent for the national sample, about +/- 5.6 percent for the oversample markets, and +/- 6.8 percent for the Gen Z group, all reported at a 95 percent confidence level.

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