If we take a look at the different studies conducted on saving in millennials we may have a double surprise. Millennials understand the value of saving, but they may not be saving what is necessary.
All the studies carried out in the last two or three years on this age range show results that may seem surprising, but really they are not so.
In the first place, all these young people in general are very cautious and very afraid of financial risk . This makes them view the long- term investments very cautiously, and that, generally, it is a segment of the population that, curiously, prefers investments or safe and low-risk savings to other options .
In fact, the really curious thing is that the percentage of those who really become aware of the need for savings is very high . In addition, it is accompanied by a high percentage of those who have savings to a greater or lesser extent. However , the number of young people who allocate these savings to investment is really low .
This gives us an immediate profile diametrically opposite to what we could imagine: young people are aware of the need to save, save, but do not want to take any long-term risk . However, time is the best ally of your money when it comes to investing.
Obviously, a generation that has grown under the effects of the economic crisis, expresses its risk aversion and fear of market movements. This seems reasonable. However, the problem lies in the conception of long-term savings or what it really was for.
Do millennials save enough for retirement?
If we pay attention to all those figures, data and studies to which we referred, it seems that millennials are not saving enough for their future retirement .
We start from the basis of a public pension system that in the not too distant future will not be able to support the current cash model , which will lead us to the fact that many less contributors must support the pensions of many more pensioners. Obviously, in order not to lose purchasing power at that stage of our lives, the need to build capital over time becomes evident . That complement to the public retirement pension will be the one that helps us minimize the impact of retirement in our pocket .
The problem is that, as we have said, the conception of saving in young people is different and, above all, very conservative .
The vision of saving is based more, in the case of millennials, on how to achieve short and medium term objectives. That is to say, the importance of contributing a part of the income for the saving is valued, but, with concrete objectives that do not go in the long term . Obviously, this has positive aspects on the one hand from the point of view of the awareness of savings, but a long-term carefreeness that does not match well with the future of retirement pensions .
On the other hand, millennials as part of a generation that has suffered a brutal economic crisis, do not sympathize with the risk in savings bets or investments.
If we think of retirement savings as a long-term career, we understand that, first, the sooner we start the less we will have to contribute systematically . Saving for a goal of € 100,000 for 20 years is not the same as doing it for 40 years. Similarly, investing at 30 is not the same as doing at 50.
Also, within the same logic, the construction of a savings road must assume more risks at the beginning, that is, during the first years of its formation, less in the middle sections, and eliminate the risk in the final section . If we had to extrapolate it at ages, we would say that we can take risks in our savings between 20 years and 40 years, we must consolidate our savings between 40 years and 50 years, and we should not expose our savings from 50 years to now of retirement. If we do not assume that first period of risk in search of greater profitability, we may also have to contribute more money to our products, or the savings portfolio that we form is not adequate. Undoubtedly, the modification of retirement savings comes by the conviction of an unflattering future for public pensions. This conviction, which seems to have not yet reached the younger generations, is undoubtedly the engine that will change the fate of savings in the coming years.