Millennials will be graduating from college with thousands of dollars in student debt, but still must start saving right away, says Karen Wimbish, director of retail retirement at Wells Fargo.
“Whether you have a lot of debt or not, you have to keep plugging… looking toward your goals and trying to make sure you’re achieving them.”
In a recent survey of millennials—defined as those born between 1980 and 2000 — Wells Fargo found that 49% were confident in their abilities to earn and save money for their financial futures. But more than half (52%) said they’re “not very confident” or “not at all confident” in the stock market itself as a place to invest for retirement.
Wimbish attributes the skepticism to millennials living through the dot.com crisis when they were young, followed by the 2008-2009 financial crisis and housing downturn. “They’ve seen families lose homes so understandably they’re skeptical about investing money,” says Wimbish.
But millennials are not unaware of the need to save and invest. Wells Fargo says that one-third of the millennials surveyed realize that saving early and often will yield a bigger nest egg.
Related: Are Millennials a "Lost Generation"?
Wimbish has some advice for them about building that nest egg:
- Contribute to a 401(k) or tax-deferred plan especially if employers match employees’ contributions. “That’s free money.”
- Contribute to an IRA if your employer lacks a 401(k) plan.
- Buy stocks.
“I believe at this point in their life, they need to be in the stock market,” says Wimbish. "They have 40 years ahead of them. You could ride a lot of cycles through that time range.”
Given the low rates on bonds, Wimbish says, “This generation should actually be the most aggressive of all investors.”
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