For now, a report on affluent millennials reveals them to be extremely idealistic, willing to put their retirement savings on a back burner in order to give their kids every advantage.
The affluent millennial may have a different take than their less successful peers. However, an online survey of 1,000 affluent investors, with assets of $500,000 or more conducted by Personal Capital, indicates that millennial’s offspring won’t have too much to worry about. Those surveyed plan on spending more than older generations on college educations and housing for their kids. That includes home purchases, by the way.
Millennials are three times more likely to commit to defraying the entire cost of their child’s home purchase and two times as likely to contribute a full down payment compared with parents overall, the survey says. In addition, 70% say they’d place saving for their child’s education above saving for their own retirement. That’s a strategy which many experts don’t like, because college can be partially financed with loans. Retirement can’t. In comparison, about half of all parents said they would adopt that strategy.
ThinkAdvisor’s recent article, “Here’s How Financially Naive Millennial Parents Are,” narrowed down PayScale’s starting salary rankings of 336 majors. Science and math are at the top.
In addition, roughly 56% of affluent millennial parents anticipate paying $100,000 or more for their children’s college education, compared with 42% of Gen X parents and 23% of baby boomer parents. A full 95% of millennial parents expect to help pay for their child’s graduate school education, with 60% providing $100,000 or more. However, the generous plans among millennial parents—who are yet to reach age 35 years of age—may change in the future.
The survey also found that 40% of millennials don’t have a retirement account, but plan to retire in 15 years with $450,000 worth of investable assets. This is a view that’s even more idealistic than the findings of the survey. The latest survey said that among affluent parents overall, about 20% plan to support their children into their 30s, with 12% ready to continue that into their children’s 40s. Almost all (97%) plan to leave an inheritance to their children, with approximately 90% planning on leaving $100,000 or more to their heirs.
The survey provides interesting insights on affluent families that they report feeling pressure to support their children into early adulthood. 64% of mothers report feeling that their children expect them to pay for college, while 44% of fathers hold that same expectation. Only time will tell, if millennials are able to reach these financial goals.
Reference: Think Advisor (September 26, 2017) “Here’s How Financially Naive Millennial Parents Are.”