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Americans Hold Increasingly Positive Outlook On Their Financial Futures

Jamie Hopkins - October 8, 2019 - 0 comments

Americans are feeling more secure. It’s no surprise seeing as unemployment rates are near an all-time low, companies look strong, the country just experienced massive tax cuts and the stock market has been on a decade-long winning streak.

A 2018 New York Life study says Americans are feeling good when it comes to their financial outlook. Less than half of the respondents (42%) say they experience stress around planning for their financial future, compared to 54% five years ago in 2013 – when New York Life released the previous edition of the study. Only 38% are worried about their ability to maintain their current lifestyle, down from 45% previously. Overall, people feel positive – roughly 76% of families report they feel financially secure right now, up from 68%.

Despite all the positive feelings toward their current financial situations, family and workplace landscapes are changing – in turn affecting the role money plays in everyday lives. The world is evolving and financial planning needs to evolve with it.

Driving the change are Millennials. Whereas countless articles and media reports say Millennials are entitled, broke, and making the wrong financial decisions, a recent analysis on the Bureau of Labor Statistics’ Panel data by the American Enterprise Institute and the Institute for Family Studies found that Millennials are just making life decisions out of order.

The study showed many Millennial parents are having children before getting married at a rate almost double that of the youngest Baby Boomers. In general, they hold a less traditional view of marriage and family planning than previous generations – both from a structural and a financial standpoint.

In the 2013 New York Life study, 78% of married respondents reported combining their finances – but the stat today is 64%. This is a dramatic shift over just five years. If that pace keeps up, it wouldn’t be unlikely that the number of married couples combining their finances is less than 50% in another five years. This could have major implications on the future of public policy and tax provisions – as both typically identify married couples as one financial unit.

Despite all of the negative news clouding the Millennial name, the study also shows Millennials have a more positive outlook on their own financials compared to other generations.

Roughly 71% of Millennials believe they are more financially responsible than their parents, as compared to 63% of Gen Xers and 62% of Baby Boomers. About 79% of Millennials feel confident in their financial future – more than both Gen X and Baby Boomers. It appears Millennials carry some financial swagger.

“Despite all the hand-wringing and criticism of Millennials’ money habits, we’re seeing that they are quite thoughtful about their finances,” said Brian Madgett, head of consumer education at New York Life. “They’ve internalized the idea that budgets, debt reduction and savings are all important financial goals to pursue in the near-term and they’re now in a place to start asking about how they can guarantee a stable future for their families.”

Although Millennials know how important saving for retirement is, it’s not a top priority for American adults as a whole. While the percentage of American adults who say they have adequate savings and are planning for retirement increased since the last study, it still highlights a huge group of adults who don’t.

Only 72 percent of respondents said saving for retirement is an important goal for them – leaving 28 percent who say it isn’t. This number is a bit concerning.

But with extended longevity, more job movement, increased mobility and the growth of the gig economy, the traditional notion of retirement could be completely thrown out in a few decades. And Millennials will likely be the first generation to toss tradition aside when it comes to retirement. This shouldn’t be a surprise to anyone as Millennials are already challenging the traditional notions of how money plays into marriage and family life.

“Many of the mid-life Millennials – those now in their late 20s and 30s – are delaying or even foregoing some of the traditional family and financial milestones of generations past,” Madgett said. “Whether these milestones happen later, out of the historic order or not at all, it doesn’t mean Millennials need to hold off on making important financial decisions. Protection-first planning has a role to play no matter how you choose to manage your family and money.”

While it’s encouraging to see Millennials and the general population of Americans feel positive about their financial future, it’s also possible much of this is being driven by the amazing run the U.S. stock market and economy has been on for a decade. Perhaps after the next market decline or recession moods will shift dramatically, but hopefully the market and country will continue their upward swing, boosting the finances and attitudes of Americans.

It’s good practice to start planning today – regardless of the economy’s status and regardless of trends or attitudes on marriage and family structure. Budget, save and manage expenses. There’s no time better than the present to take charge of your financial future and start creating a plan. It’s always better to look ahead when times are good than when times are bad.

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