Young millennials—people age 28 to 35—are more financially prepared to meet retirement goals than people in older and younger age brackets, according to a study by Barnum Financial Group, a national financial services firm based in Shelton, Conn.
The same cohort were also reported being the most familiar with annuities and, along with Generation Z, were the most likely to be enrolled in long-term care insurance and critical injury insurance, according to the Barnum’s “Americans in the Workplace” study, which surveyed 1,000 participants age 18 to 70 years old who were employed full time or part time and had a household income of $75,000 or more.
This young group seems well situated, but “they may be suffering from a false sense of security,” said Paul Blanco, Barnum’s founder, president and CEO, in an interview. “They are the most tech savvy and are comfortable with getting information from the internet. They also have a long time to prepare for retirement.” But they may feel they are more prepared for retirement than they actually are, he said.
Respondents of all ages said their definition of financial freedom in retirement was to be debt-free, but they also said they see this as their biggest challenge for their working years.
“The end of the year is a good time for advisors to look at how they are serving their clients, which cover five generations at this point,” Blanco said. “This is a time to look at clients’ plans for 2025 and get deeper into the planning process. There is an overlap, but there also are generational differences the advisors have to consider. Advisors have a big job here.”
Eighty percent of affluent, working Americans said engaging in financial planning would give them peace of mind, the study said.
However, there is a lack of understanding about financial products that is holding some people back. Sixty percent of the survey respondents said they would own more financial products if they were more educated about them. Among the generations, 72% of Gen Z respondents, those 18 to 27 years old, said they were uneducated about financial products.
As has been shown in this and other studies, more men, 82%, said they were prepared for retirement than women, 66% of whom said they were prepared. And as might be anticipated, 85% of baby boomers, those over 59 years of age, reported being experienced with retirement accounts, compared with only 35% of Gen Zers.
More than half of younger millennials said they were comfortable dealing with cryptocurrency, while only 10% of baby boomers were. At the same time, there was no group where a majority said they were very experienced with exchange-traded funds, derivatives, commodities or other alternative investments.
The study showed those with annual incomes of more than $200,000 used a variety of investment products at a higher rate than those with annual incomes of less than $149,000.
The study also revealed that 42% of all generations said they lack understanding of the fees and costs associated with investing, which has prevented them from purchasing financial-services products.
“A key finding from this report is that a significant amount of unmet financial needs exists among the working population,” Blanco said. “When it comes to helping Americans attain financial freedom, there remains a lot of work to be done by the advisor community.”