By Ariel Solomon
- Millennials have higher balances in their 401(k)s than Gen Xers did at the same age
- 44% of Black Americans vs. 65% of White Americans have retirement savings accounts
Millennials have higher balances in their 401(k)s than Gen Xers did at the same age, as the Black segment of this generation along with younger people make up 59% of the population, according to Pew Research. More interesting than the physical make-up of the group however, is their financial standing. These millennials are continuing to pace ahead in retirement savings than Baby boomers and Gen Xers.
Why This Matters: While Millennials have begun to save for retirement earlier than their parents, they also have higher 401(k) balances than Gen Xers had at the same age. This could be reflective of a number of dynamics, including the decline in pension plan participation, feelings of financial insecurity associated with being graduates of a multi-year recession, student debt, and the recent Covid volatility.
More interesting are the shifting values in retirement. For example, Boomers and Gen Xers exercise traditional instruments like stable investments, home ownership, and post-retirement wealth-building. On the other hand millennials are looking to prioritize a particular state of mind or lifestyle instead, according to a Charles Schwab study.
It’s important to note, while Millennials are ahead of their parents in retirement savings, Black Americans as a whole still lag behind their white counterparts. When we look at their participation levels and balances, only 44% of Black Americans have retirement savings accounts, compared to 65% of white Americans, with balances of $20,000 vs. $50,000.
Situational Awareness: While previous generations focused on financial stability and the potential to build generational wealth, millennials are arguably looking to achieve the same but through less traditional means. With an eye towards pursuing lifelong vibes, it will be critical that black millennials also prioritize balancing risks, timely allocations, and sound planning for the decades to come, particularly if wealth for future generations is also a goal.
CBX Vibe: “Money Trees” Kendrick Lamar
