America Still Has One Big Money Problem
How confident are you about your finances? If you ask a millennial, you’ll most likely get a positive response. Millennials are more confident about their finances than all other age groups, according to a survey by Bankrate. Roughly 32% of working millennials say they have more job security than last year. Only about 4% say they have less job security.
Millennials also say they are doing well when it comes to savings. About 30% report their savings are in better shape now than last year, double the 15% who are not reaching their savings goals. However, this is not the case for baby boomers. Only 13% of respondents who are age 50 and older say they are more confident about their savings than 12 months ago.
This is likely because many baby boomers experienced a hit to their savings accounts and retirement portfolio during the economic downturn. Consequently, some had to work longer to recover. Just 11% said they expect to retire after age 65 back in 1991. However, in 2014, 33% said they expect to retire after age 65 and 10% don’t plan to retire at all, according to the Employee Benefit Research Institute’s 2014 Retirement Confidence Survey.
Millennials lag behind in net worth
Even though millennials have demonstrated financial confidence, many are falling behind when it comes to net worth. Only 18% of millennials say they have seen improvements in their net worth. This number is much lower when compared to the 30- to 49-year-old age group. About 29% of that group says they have a higher net worth than 12 months ago.
“While millennials are doing pretty well financially, their net worth is being held back because they aren’t as invested as older adults in the stock and housing markets,” said Greg McBride, CFA, Bankrate.com’s chief financial analyst.
A mixed bag
Overall, consumers are reporting a mixture of responses when it comes to their finances. Bankrate’s Financial Security Index remained positive for the month of April. The index yielded a score of 102; any result higher than 100 demonstrates improved financial security when compared with the previous year. However the Conference Board’s Consumer Confidence Index for April was 95.2, down from 101.4 in March, showing a dip in confidence for April. This is the lowest result since December.
Savings remain low
Bankrate’s Financial Security Index survey revealed that people were feeling more confident about the security of their job, levels of debt, net worth, and their general financial health when compared with how they viewed these situations one year ago. However, consumers are not as confident when it comes to savings levels.
The U.S. personal savings rate has seen a slight increase within the last 12 months (5.8% compared with 5.0% the year before), but this area remains a weak spot. Bankrate’s Money Pulse survey showed that less than 4 in 10 respondents could cover an emergency expense and roughly 18% do not have a budget. Only about 38% of Americans said they could pay for an unexpected emergency room visit or a $500 car repair with emergency funds from a checking or savings account.