Younger workers tend to earn less money than older workers, as they are in the earlier stages of their careers. Young parents are also likely to have little disposable income, as raising a child costs a lot of money.
Yet somehow millennial parents are socking away more cash for retirement than their forebears.
A recent NerdWallet survey found that millennial parents are saving greater percentages of their income than Generation X and baby boomer parents. It also found that parents of all ages are more likely than nonparents to be saving money for retirement.
“The savings habits of millennial parents stood out: Despite being earlier in their careers and having lower incomes, they’re saving considerably more than conventional wisdom gives them credit for.”
Millennial parents out-saving older generations
For the survey, conducted by Harris Poll, more than 2,000 adults in the U.S. were polled about their retirement savings habits. They included parents and nonparents.
The findings include that millennial parents are saving twice as much of their annual income for retirement as baby boomer parents:
- Millennial parents (ages 18-34): Contributing a median of 10 percent
- Generation X parents (ages 35-54): 8 percent
- Baby boomer parents (ages 55 and older): 5 percent
NerdWallet notes that all polled survey respondents were employed. So, these percentages were not skewed by the inclusion of retirees.
Compared with Generation X and baby boomer parents, millennial parents are also:
- Least likely to be saving no money for retirement
- Most likely to be saving more than 15 percent of their income for retirement
- Most likely to say they have made sacrifices to save money for retirement
Making sacrifices to save money
Finding a way to cut back on spending is lesson No. 1 from millennial savers. There is no way around the fact that setting aside money for retirement means you will have less money to spend on something else right now.
NerdWallet found that millennial parents saving for retirement were most likely to cut back on the following types of expenses to facilitate their saving:
- Dining out
Money Talks News founder Stacy Johnson would point out, however, that it’s not necessary to sacrifice what you enjoy most to be able to set aside savings.
For example, he writes in “The 10 Commandments of Wealth and Happiness“:
“If going out to dinner with your significant other is something you enjoy, not doing it may create a happier bank balance, but an unhappier you. … Eating an appetizer at home, then splitting an entree at the restaurant, however, maintains your quality of life and fattens your bank account. Finding ways to save is important, but avoiding deprivation is just as important.”
Saving money whenever you can
Millennial parents aren’t just saving more money. They’re also using every opportunity they get to add to their savings, according to NerdWallet’s Arielle O’Shea.
The investing and retirement reporter tells Business Insider:
“Millennials are making really good decisions whenever they have an opportunity to save more. … Not just when they have a higher paying job, but they’re saving more after paying off debt and after getting married — those things are really notable.”
Older generations can’t go back in time and start saving money earlier on in life, or increase the amount of money they saved when younger.
But anyone, regardless of age, can start looking for more opportunities to sock away money — which is lesson No. 2 from millennial parents. It might not rescue your retirement, but saving whatever you can will always make a difference, even for folks already in retirement.
If you think your budget is too tight to find any money to save, check out articles like these:
- “10 Ways to Save When You’re Making Minimum Wage“
- “9 Ways to Build an Emergency Fund When Money’s Tight“
- “How to Get Started Investing When You Don’t Have Much Money“
Which tips have helped you save money for retirement? Share them with us by commenting below or over on our Facebook page.
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