Survey of investors finds respondents from millennial generation can be grouped under four personas
While previous generations’ goal in retirement might be to continue building up their wealth and their nest egg, millennial investors are more likely to use their savings to pursue their passions as they strive for – and even after they achieve – financial freedom.
That was one of the findings of the new Retirement Reimagined Study by Charles Schwab, which looked at key differences between millennials, Gen Xers, and boomers when it comes to retirement saving and lifestyle.
As reported by ThinkAdvisor, millennials in the study began saving for retirement even in their mid-20s, a decade earlier than baby boomers. However, millennials are anticipated to spend less time managing their personal money and investments once they retire than boomers or Generation Xers.
“Millennials think of retirement less as a target savings number and date and more like a state of mind or target lifestyle,” Jonathan Craig, head of investor services and marketing at Charles Schwab, said in a statement.
“We’ve seen a number of younger investors make their first-ever investments in the last two years, but we’re also seeing them go beyond those initial steps to engaging with our digital retirement planning tools and other resources that will help them make their retirement uniquely their own.”
The report also predicts four distinct retirement personalities for millennials as many of them reach retirement age around 2050.
Practical Achievers – who account for 12 to 22% of future retirees, or 8.7 million-15.9 million millennials – will emphasize financial security more than their contemporaries. They will continue to value digital investments and currencies, conduct thorough research on their holdings, keep up with macroeconomic trends, and invest equally in equities and cryptocurrencies.
Meanwhile, an estimated 9.4 million-16.6 million millennials, or 13 to 23% of future retirees, were identified as On-Trend Friends. That group will prioritize keeping up with the latest consumer trends and spend more time and money on shopping than their colleagues, driven by purchasing power and intense attention to all things culturally relevant. Similar to Practical Achievers, On-Trend Friends prize financial security as a means to maintain a robust spending and leisure budget.
Another 22.4 million-29.6 million millennials, or 31 to 41% of future retirees, were typecast as Relaxed Minimalists. More than other personas, they’re expected to cherish meaningful relationships since they are equally satisfied by the company of their inner circle and the basic pleasures of their daily routines. They'll spend less time worrying about money and more time on hobbies, relaxation, and "me time."
Finally, the High-Tech Jetsetters – 17.3 million-24.5 million millennials, making up an estimated 24 to 34% of future retirees – are a mobile and fast-paced group of people. They will prioritize travel in retirement and will be more receptive to long-term travel than their colleagues, relying on technology to stay in touch with family and friends. Their insatiable curiosity, tenacity, and devotion to the most cutting-edge technology will follow them into retirement.
Williams cautioned that people prepare for life after work to enjoy it, “but it’s important to have a solid income and distribution strategy so you don’t risk running out of money in retirement.”