Members of Generation Y have been saddled with the highest unemployment rate in decades just as they enter the workforce. Those born between 1975 and 1991 also have unprecedented levels of student loan and credit card debt. But there’s one thing they’re feeling pretty optimistic about: retirement.
Nearly half of those between ages 18 and 34 (49 percent) say their personal finances will recover from 2008’s losses in less than two years, according to a new Harris Interactive and MetLife survey of 2,191 U.S. adults conducted in September. “They lost less because they probably had less saved to lose,” says Julia Lennox, vice president for retirement products at MetLife. “They don’t have as far to go to get back to zero.” In fact, most members of Generation Y said they believe their personal finances will recover faster than the economy as a whole.
The younger savers were generally more focused on building wealth than older age groups. About half of the members of Generation Y (47 percent) said participating in market gains is more important than seeking safety, unlike the baby boomers who largely ranked protection against losses (73 percent) ahead of chasing higher returns.
While it’s true that members of Generation Y have ample time to replace 2008’s market losses and may already have begun to do so, some of their optimism may be unwarranted. About 40 percent of the 20 and early 30-somthings reported no retirement savings in the survey, compared to 30 percent among all age groups. But young Americans have taken some steps to sure up their personal finances since the financial crisis began including building up a cash cushion (70 percent), paying down credit card and other debts (66 percent), reducing spending (61 percent), and setting up regular 401(k) contributions (44 percent). “This is the generation that isn’t going to have a pension plan, so building for retirement early is important,” says Lennox. “They are learning the lessons about spending within your means and having a cash cushion and responding in those ways is the right first step.”