How Much Does the Average Millennial Have in Savings?

Millennials, generally defined as individuals born between 1981 and 1996, have navigated a unique economic landscape. Examining their savings provides insight into the challenges and opportunities they face in building financial security.

Current Landscape of Millennial Savings

Millennials are accumulating savings across various financial instruments, with distinct patterns emerging in retirement accounts and liquid savings. For instance, the average 401(k) balance for millennials is approximately $67,300. This figure represents contributions from both employees and employers, with millennials having contributed around 8.6% of their total balance and employers contributing 4.6%. Separately, the average Individual Retirement Account (IRA) balance for millennials stands at about $25,109.

When considering broader savings, including investment portfolios beyond retirement accounts, the median retirement savings for millennials is reported to be around $49,000. For those under age 35, the average retirement savings is approximately $49,130, while individuals aged 35 to 44 have an average of $141,520 saved for retirement. A notable portion of millennials, specifically 16%, have managed to save at least $100,000 for retirement.

Regarding emergency funds, the picture shows areas for improvement. A significant percentage of millennials, 34%, report having no emergency savings. Among those who do have emergency funds, 61% feel they would need at least six months of expenses saved to feel comfortable.

Factors Shaping Millennial Savings Habits

The economic environment faced by millennials has significantly influenced their savings trajectory. Many entered the workforce during or shortly after the Great Recession, a period marked by high unemployment and reduced earning potential. This timing meant that older millennials experienced substantial earnings setbacks, with the average millennial losing about 13% of their earnings between 2005 and 2017. The economic downturn made it harder for them to secure high-paying jobs or negotiate better wages, impacting their ability to save consistently early in their careers.

Student loan debt represents another substantial factor affecting millennial savings. With outstanding student loan debt totaling approximately $2 trillion across 46 million borrowers, this burden can delay financial milestones. Millennials with student loans have accumulated nearly half the retirement savings by age 30 compared to their peers without such debt.

Housing costs also exert considerable pressure on millennial finances, often outpacing wage growth. Rising home prices and increasing rents consume a larger portion of disposable income, making it challenging to save for a down payment or contribute to other savings vehicles. Fourteen percent of millennials have even resorted to dipping into their retirement savings to cover housing expenses, which can weaken their long-term financial preparedness.

Wage stagnation further compounds these financial pressures. For over four decades, wages have not kept pace with the rising cost of living, with some millennial income levels being significantly lower than previous generations at similar career stages. This persistent trend means that despite working, many millennials find their real income struggles to grow sufficiently to cover escalating expenses and build substantial savings. The cumulative effect of these economic conditions shapes the distinct financial behaviors and savings outcomes observed within the millennial generation.

Comparing Millennial Savings to Financial Benchmarks

Financial experts frequently recommend specific benchmarks for savings, offering a framework for evaluating financial health. For emergency funds, a common guideline suggests setting aside at least three to six months’ worth of living expenses. This amount provides a safety net for unexpected events like job loss or medical emergencies, preventing reliance on debt. While 61% of millennials desire at least six months of expenses saved, a significant portion currently lacks this level of liquid savings.

Regarding retirement savings, general guidelines propose saving a multiple of one’s income by certain ages. For instance, some suggest having one times your salary saved by age 30, three times by age 40, and so on, aiming for ten times by age 67. Another common recommendation is to save 10% to 15% of pre-tax income annually for retirement, including any employer contributions.

The average millennial 401(k) balance of approximately $67,300 and IRA balance of around $25,109 reflect progress towards these long-term goals. However, the median retirement savings of $49,000 for millennials indicates that many are still working towards these benchmarks. For example, to meet the guideline of having one times one’s salary saved by age 30, a millennial earning $40,000 annually would aim for $40,000 in savings. The journey toward these benchmarks is ongoing for many millennials, influenced by their individual financial circumstances and the broader economic environment.