A generation of hopeless activists?

I have written before how younger Millennials and Gen Z are different in their outlook on life and the world from previous generations. For example, they are much more community minded and much less narcissistic than their elders. Now, TIAA has added to the mix with a great survey of the financial outlook of younger Americans. In short, young people are hopeless but want to do something about it.

Let’s start with the overarching outlook on life and finances by younger Americans.

The chart below shows that when it comes to playing a role to solve societal problems like climate change, racial injustice and political division, the majority of young Americans think they have an active role to play. Yet, when looking at these challenges, they also tend to feel hopeless to the point of just giving up and living for today. But crucially, young adults have mostly agreed with the statement that they are probably going to be worse off financially than their parents. Given that we start to see a trend towards Millennials being the first generation that is indeed financially worse off than their parents, this is only realistic, unfortunately.

General outlook on life

Source: TIAA

Where things tend to get better is when it comes to the savings behaviour of young adults. The chart below shows that roughly two out of three young adults are saving for retirement. That is a higher share than Baby Boomers when they were that young and largely due to automatic enrolment in employer retirement plans and a better financial education in the press and workplace.

Are you saving money?

Source: TIAA

The enormous positive impact from automatic enrolment in employer retirement plans can be seen when young adults are asked how they save for retirement. About 70% of Americans younger than 31 and about 76% of Americans aged 31 to 35 now have a retirement plan, the vast majority of them through their employer. Hence, young Americans have a better foundation on which to save for retirement because up to 50% of their parents did not save through retirement plans until automatic enrolment came along.

Do you have a retirement plan?

Source: TIAA

Overall, this paints a picture, in my view, of a generation of young adults that is far more sensible and engaged than Baby Boomers or my own Generation X. They are more engaged in social challenges and more sensible in managing their money and saving for the future. I applaud them for that. It’s just a shame that the financial deck is stacked against them thanks to high house prices and lower expected returns for stocks and bonds after a 30-year decline in interest rates…