Young people are often told to be more fiscally mature. Parents worry that children will not save enough money or take their financial responsibilities seriously, setting aside long-term goals in favor of short-term gratification. However, at Massachusetts Mutual Life Insurance Company (MassMutual), we can't help but notice this generation bucking the trend.
In decades past, many young people may have been content to delay financial planning, at least until they settled down. Today, we see young adults charting their financial futures at earlier ages. Recent studies on members of Generation Y, also known as the Millennial Generation, reveal that they are proving themselves to be savvy, ambitious and goal-oriented.
According to Sowing the Seeds for Retirement: Gen X and Gen Y Markets, over half of young adults have 'rainy day' funds. Those with employer-sponsored retirement plans average over $25,800 in retirement savings. Despite a variety of savings goals, Millennials are seriously focused on meeting financial objectives and demand meaningful commitments from companies to ensure they are met.
In fact, according to the 2013 MassMutual State of the American Family research study, the top five financial goals of Millennials are planning for managing income in retirement, paying off a mortgage, developing a monthly budget, saving/investing for their child's college education, and making sure family is taken care of when they die.
If Millennials have the wherewithal to take their finances seriously--which they clearly do--the responsibility lies with financial services companies to help them meet their objectives. This generation has come of age in one of the bleakest economies in decades. They are amongst the first to navigate a new reality, in which the future of our social safety net is in question.
They understand that the promises made to previous generations--support in sickness, care in old age and income in retirement--won't likely be made to them. According to a 2011 Pew Research study, The Rising Age Gap in Economic Well-being, 42 percent of Millennials expect to receive no retirement income from Social Security. They understand the new reality, and are adjusting their priorities accordingly by trimming debt at four times the rate of other generations and delaying high-cost purchases. With this cloud of uncertainty, many young adults are rolling up their sleeves and taking steps to be more responsible for their financial futures. They're researching online, exchanging information and having candid conversations about their financial futures with peers, parents and financial professionals.
Not only do Millennials hold themselves to a high standard, but they also have similar expectations for the companies they do business with. They demand a focus on long-term needs, and reject one-way, top-down relationships. According to the 2012 Boston Consulting Group study The Millennial Consumer: Debunking Stereotypes, 53 percent explore brands through social channels, and many prefer peer reviews over those of traditional "experts."
Suffice it to say, this generation cares about the brands they do business with. They choose responsible corporate citizens, not just purveyors of products and services. A 2010 Corporate Social Responsibility Perceptions Survey by Penn Schoen Berland found that 77 percent of consumers prioritize corporate social responsibility. Likewise, a 2011 public opinion survey by Do Well Do Good LLC found that 61 percent of consumers would buy a new brand if it supported a cause they cared about. Companies need to treat corporate responsibility efforts not merely as charitable efforts, but as business imperatives.
Young people don't need a new approach to financial services. Financial companies need a new approach to young people.
At MassMutual, we admire the new generation for raising the bar, and have committed to meeting them on their path to financial security. We're taking our message online, launching new products and continuing to innovate through our corporate social responsibility efforts. Although our work with this generation has only just begun, their response has already been extraordinary.
Young people don't need to change. They already have. All of us just need to catch up.