Millennials: keeping time on their side

To people in their 20s and 30s, retirement must seem a long way off. And it’s no wonder, since for most millennials (those born between 1981 and 1996) their post-work life probably won’t start for another 30 or 40 years.

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So yes, time is on their side. The trick is to recognise time as the huge advantage that it is and make the most of it.

"With more time spent studying and more debt, millennials are living at home longer.”

Millennials face unique challenges in saving for retirement partly because they are starting to work and earn later in life than did previous generations, according to leading Australian social researcher Mark McCrindle.

“They are earning later than their parents because they are in study longer,” McCrindle explains. “They are far more likely to go to university and accumulate HECS and lifestyle debts, like owing money to their parents.

“Beyond that, millennials will live longer than previous generations and have longer in retirement to fund. Their living costs are higher than ever as well, so certainly there are economic challenges.”

Research undertaken by ANZ into the financial wellbeing of different age groups also shows only 40 per cent of millennials feel on top of their money. One in five don’t have any savings.


Precarious position

With more time spent studying and more debt, millennials are living at home longer. The 2017 Household, Income and Labour Dynamics in Australia survey found:

  • in 2001, 43 per cent of men aged 22 to 25 lived with their parents, as did 27 per cent of women in the same age bracket; and
  • by 2015 those proportions had risen to 60 per cent of men and 48 per cent of women.

Home ownership rates among young people have also fallen dramatically, thanks to Australia's rampant property price growth. In 2014 only 25 per cent of Australians aged 18 to 39 owned a home, down from almost 36 per cent in 2002, the survey found.

Millennials are also waiting longer to begin forming a family. The average age for men to marry is now 29.9 years, and for women it’s 28.3 years. Compare that to when Baby Boomers were young: data from the Australian Institute of Family Studies shows in 1982 the average age of first marriage for men was 24 years and for women it was 22 years.

Career-wise, young people are now choosing more flexible – but less stable – working arrangements. McCrindle’s research into the future of work found one in five millennials of working age had worked in freelance, contract or casual roles, and half of all millennials said they preferred these non-traditional working styles.

“If the sentiment plays out, we’re going to see more of that into the future,” he says.

While working in the gig economy offers the potential for higher income, greater flexibility and a better work-life balance, it also has some less desirable consequences for millennials’ financial futures.

“The downside on earnings is people who were otherwise going to be working full time but end up in the gig economy may end up earning less because they may choose to work less,” McCrindle says.

Not high on the radar

With a lifetime still ahead of them and so many milestones yet to come, it can be difficult for millennials to start thinking about retirement.

In fact, the Financial Services Council report, Millennials’ engagement with superannuation found young people are three times less interested in the health of their superannuation than older generations.

Only 8 per cent of Millennials surveyed could identify the amount of money they would need in retirement and the majority didn’t check their super balances (not surprisingly though, millennials are more likely to check their bank accounts several times a day than any other age group).

But it’s not too late; time is still on their side.

Zoe Fielding is a freelance journalist.


This article was originally published on ANZ’s Superannuation Learning Centre.


The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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