Many studies have been done on the “affluent millennial” demographic in recent years, and with good cause. Millennials are the largest demographic segment in the U.S. today, and 15.1 million of them are considered affluent. They represent a large chunk of buying power, and many companies are courting for their favor.
While the exact cutoff on what constitutes a millennial (versus Generation X and Generation Z) varies, it’s safe to say that a millennial is anyone who came into adulthood around the turn of the millennium. Their birth years range from about 1981 and 1996 or so.
Defining affluence is even more subjective. Some define affluence by investable assets ($100,000 or more) and some by household income ($132,000 or more). In either case, affluent millennials are well off compared with their peers.
Affluent millennials have a much different financial outlook than the previous generation, and even from their non-affluent peers. Take a look at what the stats reveal about the habits, preferences, and choices of affluent millennials.
Their Investment Portfolios Look Like Their Parents’
Despite having more to invest than their non-affluent counterparts, affluent millennials are rather conservative when it comes to investing. In fact, many of their investing choices mirror that of Generation X—their aging parents’ generation.
Affluent millennials are about as likely to utilize conservative financial products like bonds, high-yield savings accounts, CDs, and annuities as their Gen X counterparts, despite the fact that they have decades more for their investments to grow. Millennials are also 10% less likely to own stocks.
Many experts agree this tendency toward conservative investing is due the fact that millennials came of age during the Great Recession. Watching the stock market and housing prices plummet in their formative years has steered many affluent away from the greater risk—as well as the greater rewards—of more aggressive investment vehicles.
They are Weighed Down by Debt
A high percentage of millennials carry debt (88%), even though nearly as many (86%) consider being debt free as a hallmark of financial success. Mortgage, credit cards, student loans, and auto loans are the most common forms of debt for affluent millennials.
It seems that affluent millennials are getting comfortable with the idea of debt. About a third believe they won’t be able to rid themselves of debt—even in retirement.
In another survey, affluent millennials prioritized living comfortably and feeling financially secure over paying down debt. They see debt as a way of life, and not necessarily an inhibitor to other financial goals.
They Have High Hopes and Goals
Despite the burden of debt and skittishness about investing, affluent millennials are optimistic. Eighty-one percent believe they will be more financially successful than their parents were.
Additionally, affluent millennials have high aspirations. They are more likely than affluent Gen Xers to have a goal of starting a business, creating a charitable foundation, or owning a second home. They are further along in reaching their life goals (like owning a home, completing an education, starting a family, etc.) than their non-affluent peers.
Their wealthy status likely comes from affluent millennials’ high value of financial success. Behind family and health,
financial wealth was the next-highest priority. As the saying goes, “What you think about, you bring about.”
They are Savers
Affluent millennials place a high value on saving for rainy days. After all, they saw quite a few of them in 2007-2009.
They are also more likely than their non-affluent peers to have a retirement savings account. Of affluent millennials, three out of five have an IRA, compared with only one in four of non-affluent millennials.
A Unique Generation
The stereotype of the selfie-snapping, lazy, noncommittal millennial is pervasive, but for affluent millennials, the data simply doesn’t back it up.
(Okay, maybe we’ll concede on the selfie-snapping part.)
As digital natives, millennials are accepting of new and disruptive technologies, but retain a healthy dose of skepticism based on their life experiences. They are savers, and they are protective of their savings—even at the expense of other goals like financial growth or paying off debt.
As a group, affluent millennials definitely have obstacles to overcome, but many are making good progress on their financial journeys.