Credit: Shutterstock photoMillennials and baby boomers are quite different when it comes to key aspects of their financial lives, especially their retirement planning. And millennials are more likely than boomers to marry someone with whom they'll argue about finances.
Those are some key findings in a new survey by the brokerage TD Ameritrade . Each generation can learn lessons about retirement planning from the views of the other.
About the only way you can say millennials and baby boomers are almost identical in their approach to personal finance is that high percentages of both are saving for retirement . Eighty percent of boomers are saving for retirement, and so are 72% of millennials, the survey finds.
As for differences between the two generations, take a look at their typical spouses and how they impact each generation's prospects for marital bliss.
TD Ameritrade asked the people it polled to categorize themselves as either savers or spenders. In general, savers want to feel that they can meet their financial obligations no matter what life throws at them. Spenders want to enjoy life now.
It turns out that 66% of boomer savers are married to fellow savers. Only 52% of millennial savers are married to savers.
Why does that matter? Because a saver being married to another saver prevents arguments about money . So say 59% of boomers and 57% of millennials.
And 40% of boomers said they would not be happy in a relationship with a spender. Only 23% of millennials felt that way.
So their spousal choices, along the lines of savers and spenders, means millennials seem to be headed toward more marital money squabbles than boomers are.
In addition, there's more marital downside to being married to a spender. Self-confessed spenders who are married to a spender say that the pairing of profligates makes it harder to plan for the future. That's especially true for millennials. Forty-three percent of millennial spenders say that being married to a fellow spendthrift makes planning harder.
One reason is likely that they have less income, says Matt Sadowsky, TD Ameritrade's director of retirement and annuities. Millennial spenders average incomes of $48,720, less than the $52,890 average for millennial savers, the survey found.
Another reason it is harder for spenders to plan for the future is that they simply do not pay as much attention to their future needs as savers do -- regardless of which generation they belong to.
Sixty-four percent of millennial spenders define themselves as spenders precisely because they spend to enjoy life now. And 52% of boomer spenders do the same thing. "Based on this data, spenders don't seem to be thinking of their future as a priority," Sadowsky said.
More Discipline
Another key difference between millennials and boomers is that boomers have more financial discipline. When confronted with something they want but can't afford, boomers are more likely to not buy it. Forty-nine percent of boomers accept that they don't have enough money for the purchase, and they move on. But only 37% of millennials accept that limit.
Of course, boomers are the older of the two generations, and so they generally have more money. So it may be ironic that boomers believe they need less money to be happy than millennials do.
Fifty-four percent of boomers say they need only a little more money than what's needed to cover essentials to be happy. But only 34% of millennials settle for that.
And 56% of millennials say they need a lot more than the minimum for essentials or "a somewhat substantial amount of money above the minimum for essentials." Only 34% of boomers say they need that much.
The yearly personal income that boomers say they need to be happy is $58,000 on average. That's not much more than the $51,000 cited by millennials.
Peer Pressure
Millennials blame a lot of their money woes on peer pressure. Thirty-four percent of them feel pressure to keep up with friends' spending habits. Only 8% of boomers feel that way.
And a lot of millennials' peer pressure is exerted through social media. Forty-six percent blame social media posts.
When asked specifically if sharing images and milestones on social media makes them compare their situation with that of others, 64% of millennials say yes. Only 29% of boomers feel that way.
Perhaps because they are in better shape financially for retirement, boomers are less willing to retire later in life to make their nest eggs last longer. Only 32% of boomers say they would work longer for that reason, while more than half - 53% -- of millennials say they would retire later to stretch their nest eggs.
That difference seems to be a classic case of necessity being the mother of invention -- when it comes to retirement planning.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
