In the endless flow of millennial-focused surveys, one finally stuck out to me.
It came via email from Canadian firm RBC Wealth Management, which found that when it comes to money, millennials are more confident and prepared than previous generations. We feel responsible for understanding our financial affairs and do research to improve our financial knowledge, the survey reported.
I believe all of this is true, which is why I initially overlooked that this survey wasn’t actually about a group to which I belong: It was solely focused on high net worth millennials, specifically 479 respondents under age 35 with average investable assets of $5.7 million. The majority in this group expect to receive an inheritance, if they haven’t already.
So: Rich millennials with rich parents are doing great — financially speaking, anyway. What about the rest of us?
Luckily, there’s no shortage of surveys, many of them bleak but also lacking in concrete data. I suspect we’re doing better with our money than these surveys say, but as within most large demographic groups that have little in common outside of their age and a grating nickname, there’s a wide range of realities. Some millennials are surely struggling; a few apparently count their money by the million.
Where you fall on that spectrum depends on a long list of factors — some in your control, some not. But the good — and, I hope, obvious — news is that you don’t need over $5 million invested by age 35 to have a secure financial future. Here’s what you do need.
A little perspective
Research shows piles of money won’t increase your happiness, but being financially comfortable certainly might. Most people have their own definition of financial comfort, but generally speaking, it helps to stay out of high-interest debt, maintain at least a small pot of emergency cash, and feel like you’re making progress toward meeting your retirement goals.
That last point requires knowing what your goal actually is, and that depends on your current income and retirement expectations. If you’re saving somewhere in the neighborhood of 10% to 15% of your gross income each year, you’re doing pretty well.
People who earn lower incomes can — and typically do — fall toward the 10% side, both because they often have less money available to save and because a greater percentage of their income will be replaced by Social Security in retirement. Higher earners should aim for 15%. If you’re counting on an inheritance, well, you might want to chat up your parents to be sure.
To get a personalized target for how these percentages translate to actual dollars, punch your numbers into a retirement calculator.