Having a drink with a friend one warm evening after work in Philadelphia, Michelle Wisnieski, 28, rolls her eyes when asked about the stereotypes surrounding her generation.
Yes, she says, Millennials themselves—that generation born between 1981 and 1996—joke ruefully about negative portrayals of them as party-loving, job-hopping, and frivolous with money, focused entirely on now and not the future. But that stereotype, Wisnieski says, does not describe her—nor many of her Millennial friends.
A Penn State graduate making “a little over $50,000” as a premium analyst for an insurance company, she says she’s already investing for a retirement that’s likely more than three decades away.
She puts 4 percent of her earnings each payday into her 401(k) account at work, and her employer adds an additional 4 percent. She has disciplined herself to do this despite having substantial college debt, which she’s paying off at a regular rate, as well.
“I wouldn’t say I’m savvy with it, but I try to be conscientious that I am putting away enough money,” she says. “My dad always told me not to rely on Social Security; you have to invest for yourself. My dad has a pension, and he’s, like, ‘you’re not going to get that.’”
And, it turns out, Wisnieski and her friends are more typical of the Millennial generation than common wisdom might suggest.
A report released in May by Pew’s retirement savings project analyzed U.S. Census Bureau data and found that in 2012—when the most recent data were available—Millennials had higher balances in their 401(k)s and other defined-contribution plans than members of Generation Xers—born between 1965 and 1980—did at a similar age. The analysis also showed that workers had more access to these plans, but that those gains were offset by less access to other defined-benefit plans as employers continue moving away from more traditional retirement programs—just as Wisnieski’s father warned. In fact, Millennials are the first generation to rely primarily on defined-contribution plans, such as 401(k)s, which put responsibility on workers, rather than on their employers, for saving.
The increase in savings from Gen Xers to Millennials offers a glimmer of optimistic news at a time when surveys show most Americans aren’t putting enough away for their retirement.
“I think the main takeaway is that while we may think of Millennials as not caring about their financial future, they’re actually doing pretty well in terms of preparing for retirement—although they could be doing more,” says John Scott, who directs the retirement savings project.
Given that Millennials are now the largest generation, how they do in meeting their retirement needs will matter not just to them but to the whole of American society and the national economy in the decades ahead.
“There are so many of them that it’s important that they save for retirement,” Scott says. “If they don’t, the government is going to have to provide for them in some form when it’s time for them to retire.”
Their numbers also mean that Millennials are the largest segment of the labor force. More than 1 in 3 Americans who were working or looking for work in 2017—56 million people in total—were Millennials.
Financial industry research reinforces Pew’s findings on Millennials and savings. The Transamerica Center for Retirement Studies said in a December 2017 report that 71 percent of Millennials are saving for retirement through employer-sponsored plans—perhaps spurred on by a decade of gains on Wall Street, combined with automatic enrollment in many employer plans. Recent conversations with young people in and around Philadelphia—a city that has become a magnet for Millennials in the past decade, helping to reverse decades of population decline there—revealed a consistent theme of needing to think about retirement.
Phillip Spence, 31, who sells a health care reporting product for Medicare providers, notes that since the deduction is taken before he sees his pay, he doesn’t feel the impact.
“I don’t think about it; I know it’s there,” Spence says from a bench outside of Philadelphia City Hall, across a plaza from his office building. “I sometimes check my investments. They’re doing well for now.”
Rob Barg, an actuary for a software company who lives in Moorestown, a New Jersey suburb, says he has no idea, at age 33, what sort of financial goal he needs to set—but he knows he needs to save.
“I just sort of save as much as I can,” he said. “I’m too far away from knowing how much I’ll need.”
He’s not alone. A decade after the Great Recession, many Americans responding to polls and surveys still express unease about their economic futures. Millennials are no exception: A 2014 Pew Research Center survey indicated that 51 percent of them believe they won’t get any benefits from Social Security and that 39 percent believe they’ll get only reduced benefits.
That means that most of today’s young adult workers believe the traditional three-legged stool of a successful retirement—Social Security benefits, a pension, and personal savings—could have only one leg left, their own savings, by the time they exit the workforce.
“I think part of the reason why we’re seeing some Millennials taking charge of their retirement futures is that a lot of these folks went through the recession 10 years ago,” Scott says. At the time, many millennials “were just coming out of college and trying to find a job, and I think that made an impression on a lot them. So now, when they do get a chance to save, they take advantage of it.”
Michelle Liu, who lives with her parents in the Philadelphia suburbs, was born in 1994 and remembers 2008 as “a scary time. My dad was unemployed and so I definitely feel pressure to put away a lot of savings, and I have done that.”
Cherrae Bourne, a 31-year-old registered nurse at Children’s Hospital of Philadelphia, says she’s taking the long view, too. She has stayed with one employer for six years, enrolled in her workplace retirement program, and takes the maximum matching contribution from her employer.
“We’re doing OK; we’re doing good,” she says of her friends as she lingers after work at an outdoor food-and-drink event sponsored by the Center City District.
“We’re doing a lot of things the stereotype says we don’t do. I think, for the most part, a lot of us have our heads on tight.”
Yet for all the good news, many Millennials face high college debt—which could be among the biggest obstacles to accumulating retirement nest eggs at a young age and reaching other financial milestones such as the purchase of their first home. A Pew survey found that in 2014, 41 percent of Millennials reported having education debt with a median amount of $20,000.
“I think people are so concerned about paying off student debt that they don’t even think about retirement,” says Emily Gumpper, who turns 25 in November. She studied psychology at Temple University and has a good job at the same insurance company where her friend Michelle Wisnieski works. But she’s struggling, she says, to reduce her student loan balance and participate in her 401(k) plan at the same time.
“We have a generation that is not buying houses,” Gumpper says. “My parents were already on their second house when they were my age. I have to fix my credit first and then move on from there. It’s not easy paying off that debt.”
In fact, the Pew Research Center has reported that Millennials are the first U.S. generation in the modern era to have higher levels of student debt, poverty, and unemployment than their two immediate predecessor generations had at the same age.
But while heavily burdened, Millennials are optimistic about the future. More than 8 in 10 expect to have enough money for the lives they want to lead in the future. And some even dream of leaving the workforce earlier in life, compared with older generations. There’s a popular acronym for this movement: FIRE (financial independence, retire early).
“I’m the typical Millennial,” says Shamea Crafton, 31, a human-services case worker who lives in Melrose Park, just over the Philadelphia city line. “I don’t want to work for someone for the rest of my life.
“I went to a free finance class at the University of Pennsylvania,” Crafton says, “and I learned about stocks and bonds. I just do it on my own.”
Jeff Rupertus, who, at 37, is an older Millennial, says it took him a number of years of “job-hopping and career-hopping” to get on course.
His last job, as a private school teacher, wasn’t getting him where he wanted to go. So now he buys houses in up-and-coming Philadelphia neighborhoods and pays them off with “other people’s money”—the rent paid by tenants, many of them Millennials.
“If I continue doing this, I’ll be well on track to retire,” Rupertus says. “My goal is to be 45 years old, financially free, completely retired, and able to do what I want to do.”
Tom Infield is a longtime Philadelphia journalist and frequent contributor to Trust
Photography by Scott Lewis