Importance of self-care in financials - January 28, 2018
The new generations started to realize how important financial self-care is. A new study from Merrill Edge suggests that Generation X and Y are preparing themselves for the future. They also plan their retirement, but they believe that for that, they need their own savings and investments instead of social security.
Generation X and the Millennials (also called Generation Y) shift their financial views, turns out from Merrill Edge’s new study. They regularly conduct studies regarding this subject, and they have found some important changes. While in 2015 they saw that 43% of Millennials believed they would have to rely on their family or friends financially, now 66% of them say that they are going to be self-sufficient in the future.
Who are they?
Researchers often debate the borders between generations, but Generation X members were mostly born from the middle of the 60s to the early 80s. They are tech-savvy in many cases, and have less children than the generations before them. They are loyal workers, but also try to find a balance between work and their private life.
Millennials, or Gen Y, came after them: they were born in the 80s and 90s, and they are deeply familiar with digital technologies. Work-life balance is even more important to them, and social consciousness is a top priority for a Millennial. The Great Recession (2007-2012) had serious influence on them, and many believe that moving out from their parents is significantly postponed in this generation.
What has changed?
Up until now, many believed that this private life – work balance means that they are having too much fun, and “eating avocado toast […] and not saving for the future” says Aron Levine, head of consumer banking at Merrill Edge. But now, they found out that it’s not like that. They started to save money and they are also much more financial-savvy than they believed it before. They use their digital skills in investing as well.
Furthermore, the study revealed important things about how these generations think about their retirement. While baby boomers (born between mid-40s and mid-60s) trust firmly in social security, Gen X members believe in their 401K plans (employer sponsored retirement savings plan), and millennials mostly trust their own savings and investments. Social security is less important to them.
Why is this important?
This change is rather important as it’s more and more obvious how classical retirement plans are not going to work in the future. We also wrote about the global pension crisis we face, and how it’s even more important that people start to save money in time. Self-care in this area is indeed important. Merrill Edge’s study has another interesting point: more people say that they are not going to stop working altogether at the age of 62.
Merrill Edge points out that in the next 10 years the biggest transfer of wealth will happen in history, as “the bloomers and seniors transfer their money to the Millennials”. This also means – points out Aron Levine – that they will need more professionally crafted, advice driven investments then ever before.
Disclaimer: This analysis is for general information and is not a recommendation to sell or buy any instrument. Since every investment holds some risk, our main business policy is based on diversification to minimize threats and maximize profits. Innovative Securities’ Profit Max has a diversified portfolio, which contains liquid instruments. This way, our clients can maintain liquidity, while achieving their personal investment goals on the long term.