Wells Fargo survey: Who thinks they’ll be a millionaire?
BUSINESS RECORD STAFF Aug 4, 2016 | 3:30 pm
1 min read time
327 wordsAll Latest News, Banking and FinanceA majority of millennials believe they aren’t making enough money to save for retirement, and most say they’ll never reach the $1 million goal that advisers say is needed to fund a long retirement.
Nearly two-thirds (64 percent) of working millennials say they will never accumulate $1 million in savings over their lifetime, according to a new Wells Fargo Millennial Study.
Fifty-nine percent of millennials have started saving for retirement. Of the millennials who are not saving for retirement, 64 percent say they are not making enough money to do so.
“Saving $1 million is often noted as a nest-egg target to help fund a multidecade retirement, so we wanted to find out if today’s millennials think they can get there,” said Joe Ready, director of Institutional Retirement and Trust for Wells Fargo. “A majority don’t think so. Millennials may not realize that if they start saving consistently by their mid-20s — and stay invested for the duration of their working years — they will likely accumulate $1 million by the time they retire.”
A millennial who earns a starting salary of $32,000 at age 25, saves 5 percent the first year and then increases their savings rate by 2 percentage points each year (up to 13 percent) could accumulate $1 million by age 65. This assumes the person receives a 2 percent salary increase annually, is invested in the market and realizes a 7 percent return on invested assets.
According to the study, 34 percent of millennials have student loan debt, with a median debt load of $19,978. For those who have debt, 75 percent say their student loan debt is “unmanageable.” Yet, of this group, 70 percent are still saving for retirement, at an average savings rate of 5.5 percent.
The Wells Fargo Millennial study was conducted by GfK and surveyed more than 1,000 U.S. adults between the ages of 22 and 35, with an additional oversample of 500 Hispanic millennials for comparison purposes.
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