What, you don't have $100k saved? Survey claims 15% of millennials do
Click to read this study. But take it with a grain of salt.
If you feel bad about yourself today, it might be because Bank of America released a report this week claiming that 1 in 6 millennials already have $100,000 or more in savings. And just about half (47%) have $15,000 or more. Naturally, this counter-intuitive (generous!), positive result got pretty wide coverage.
It's also a little silly. I mean, inconsistent with other studies about Americans' saving rates. So don't worry. If you are under 37 and you're sitting with five friends and none of you have $100,000, don't feel bad about yourself.
Before I unpack the numbers, and explain what I suspect happened here, let me say this: The spirit of this study isn't incorrect. Millennials are unfairly characterized as spoiled, avocado-toast eating, cavalier spenders who can't hold a job. In reality, having come of age during the housing market collapse, many are smartly budget-conscious and appropriately nervous about debt. Let's call them Recession-era kids, akin to thrifty Depression-era adults born during the 1930s (hi mom and dad). They are also unfair cast job-hoppers, when the economy they've inherited has forced that on them.
Bank of America sure seems to have taken this pro-youth message and tried kind of hard to find some data that would make millennials really, really like them. Fortunately, this group is also naturally cynical and probably won't fall for it.
If you dig into the report, you'll find Bank of America used some creative methodology to make sure that young people from Raleigh, San Diego, Pittsburgh, Denver, and Seattle were intentionally over-represented in the study. Well, that explains that. Plenty of young techies in those cities. (The report also notes the margin of error among this group was high). Is it possible that 15% of 30-somethings in Pittsburgh have $100,000 in savings? Sure. If you invested $425 a month in an S&P 500 index fund for the past 10 years, you'd have $100,000 too. So, sure.
"Savings" is a funny word, though. Is a retirement account "savings?" Not traditionally, since it can't be accessed without penalty. And what about debts? Sure, someone might have $100,000 in a 401(k) by age 35, and that's great, but if that someone is also paying $400 a month on a student loan, does that really mean they have $100,000 in savings? No.
Back to that word "savings." Normally, savings means cash -- as in, money you could spend if something went wrong. Something like an emergency. And I'm sure I don't have to tell you that plenty of studies show that roughly half of (all) Americans don't have a decent emergency fund, depending on how you count. For example: 46% of all ages told the Federal Reserve two years ago that it would be challenging to cover a surprise $400 expense; 31% said they couldn't cover it. One in 3 American families told Pew they had no savings, including 1 in 10 of those with incomes of more than $100,000 a year, in 2015. Zooming in on Millennials, however you define them, is trickier, though it's hard to imagine Millennials as a group are so much better off than all ages. Some quick research shows that the U.S. Census believes millennial assets ("savings" minus debt) are far, far, far under $100,000 -- median assets for those under 35 group are $6,900 -- $4,138 if home equity is excluded. Median retirement account size is $16,000, by the way, which is in line with the "savings" result above -- that half of young adults have $15,000 saved. But for my money, total assets is a far better number that the vague "savings." It accounts for both sides of the ledger.
For what it's worth, in a Bankrate survey last year,Millennials came out pretty good. It found that 50% said they have at least 3 months living expenses in emergency savings, a rate equal to older Americans. That's impressive, though their calculations for emergency expenses is probably different from the older crowd.
My point in this story isn't to bash Millennials -- far from it -- but to avoid setting them up with unfair expectations! Saving is great! Retirement accounts are great! And yes, $100 a week for 10 years might very well get you $100,000 in a retirement account, so start today! But if you are under 37 and don't have $100,000, don't feel bad. Odds are very few of your friends have $100,000 either.
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