MONEY Savings

Millennials Are Hoarding Cash Because They’re Smarter Than Their Parents

Cash under mattress
Zachary Scott—Getty Images

Sure, young adults could get higher returns by investing in stocks, but many have good reasons to stay safe in cash right now.

Another day another study about the short-comings of Millennials as investors. This time around, Bankrate.com weighs in—data from their latest Financial Security Index show that 39% of 18-29 year-olds choose cash as their preferred way to invest money they won’t touch for least 10 years. That’s three times the percentage that would choose stocks.

“These findings are troubling because Millennials need the returns of stocks to meet their retirement goals,” says Bankrate.com chief financial analyst Greg McBride. “They need to rethink the level of risk they need to take.”

Bankrate.com is not the only group trying to push Millennials out of cash and into stocks. Previous surveys have scolded young adults for “stashing cash under the mattress,” being as “financially conservative as the generation born during the Great Depression,” and more being “less trustful of others”—in particular financial institutions and Wall Street. (You can find these surveys here, here and here.)

These criticisms are way overblown. It’s simply not true that Millennials are uniquely averse to equities—many are investing in stocks, despite their responses to polls. As for cash holdings, keeping a portion of your portfolio liquid is simply common sense, though you can overdo it.

Here’s what’s really going on:

  1. Millennials are not much more risk averse than older generations. In the wake of the financial crisis, investors of all ages have been keeping more of their portfolios in cash—some 40% of assets on average, according to State Street’s research. Baby Boomers held the highest cash levels (43%), followed by Millennials (40%) and Gen X-ers (38%). That’s not a wide spread.
  2. Many Millennials do keep significant stakes in equities. This is especially true of those who hold jobs and have access to 401(k) plans. That’s because they save some 10% of pay on average in their 401(k)s, which is typically funneled into a target-date retirement fund. For someone in their 20s, the average target-date fund invests the bulk of its assets in stocks. Thanks to their early head start in investing, these young adults are an “emerging generation of super savers,” according to Catherine Collinson, president of the Transamerica Center for Retirement Studies.
  3. Young adults who lack jobs or 401(k)s need to keep more in cash. Most young people don’t have much in the way of financial cushion. The latest Survey of Consumer Finances found that the average household headed by someone age 35 or younger held only $5,500 in financial assets. That’s less than two months pay for someone earning $40,000 annually, barely enough for a rainy day fund, let alone a long-term investing portfolio. Besides, that cash may be earmarked for other short-term needs, such as student loan repayments (a top priority for many), rent, or more education to qualify for a better-paying job.

There’s no question that young adults will eventually have to funnel more money into stocks to meet their long-term right goals, so in that sense the surveys are right. But many are doing better than their parents did at their age—the typical Millennial starts saving at age 22 vs 35 for boomers. And if many young adults hold more in cash right now because they’re unsure about their job security or ability to pay the bills, there are worse moves to make. After all, it was overconfidence in the markets that led older generations into the financial crisis in the first place.

MONEY Millennials

10 Things Millennials Won’t Spend Money On

Young businessman with groceries and bicycle
Valentine—Getty Images/Fuse

By 2017, millennials will have more buying power than any other generation. But so far, they're not spending like their parents did.

Millennials are often maligned for their lack of financial literacy, but there is one money skill the younger generation has in spades: saving. After growing up during the Great Recession, millennials want to keep every cent they can. (If you don’t believe us, just check out this Reddit Frugal thread inspired by our recent post on millennial retirement super-saving.)

This generation may be way ahead of where their parents were at the same age when it comes to preparing for retirement, but the frugality doesn’t end there. Kids these days also aren’t making the same buying decisions our parents made. Here are 10 things that a disproportionate number of today’s young adults won’t shell out for.

1. Pay TV
The average American still consumes 71% of his or her media on television, but for people age 14-24, it’s only 46%—with the lion’s share being consumed on phone, tablet, or PC. Many young people aren’t getting a TV at all. Nielsen found that most “Zero-TV” households tended toward the younger set, with adults under 35 making up 44% of all television teetotalers.

Millennials aren’t the only ones tuning out the tube. In 2013, Nielsen reported aggregate TV watching time shrank for the first time in four years.

2. Investments
By all accounts, young people should be investing in equities. Those just entering the work force have plenty of time before retirement to ride out market blips, and experts recommend younger investors place 75% to 90% of their portfolio in stocks or stock funds.

Unfortunately, after growing up in the Great Recession, millennials would rather put their money in a sock drawer than on Wall Street. When Wells Fargo surveyed roughly 1,500 adults between 22 and 32 years of age, 52% stated they were “not very” or “not at all” confident in the stock market as a place to invest for retirement.

Of those surveyed, only 32% said they had the majority of their savings in stocks or mutual funds. (Too be fair, an equal number admitted to having no clue what they were invested in, so hopefully their trust fund advisors are making good decisions.)

3. Mass-Market Beer
Bud. Coors. Miller. When parents want a drink, they reach for the classics. Maybe a Heineken for a little extra adventure. Millennials? Not so much. When Generation Now (thank god that moniker didn’t catch on) wants to get boozy, the data says we prefer indie brews.

According to one recent study, 43% of millennials say craft beer tastes better than mainstream beers, while only 32% of baby boomers said the same. And 50% of millennials have consumed craft brew, versus 35% of the overall population. Even Pete Coors, CEO of guess-which-brand, blames pesky kids for his beer’s declining sales.

4. Cars
Back when the Beach Boys wrote Little Deuce Coupe in 1963, there was a whole genre called “Car Songs.” Nowadays you’d be hard pressed to find someone under 35 who knows what a “competition clutch with the four on the floor” even means.

The sad fact is that American car culture is dying a slow death. Yahoo Finance reports the percentage of 16-to-24-year-olds with a driver’s license has plummeted since 1997 and is now below 70% for the first time since Little Deuce Coupe’s release. According to the Atlantic, “In 2010, adults between the ages of 21 and 34 bought just 27 percent of all new vehicles sold in America, down from the peak of 38 percent in 1985.”

5. Homes
It’s not that millennials don’t want to own homes—nine in ten young people do—it’s that they can’t afford them. Harvard’s Joint Center for Housing Studies found that homeownership rate among adults younger than 35 fell by 12 percent between 2006 and 2011, and 2 million more were living with Mom and Dad.

It’s going to be a while before young people start purchasing homes again. The economic downturn set this generation’s finances back years, and reforms like the Dodd-Frank Act have made it even more difficult for the newly employed to get credit. Now that unemployment is decreasing, working millennials are still renting before they buy.

6. Bulk Warehouse Club Goods
This one initially sounds weird, but remember: millennials don’t own cars or homes. So a Costco membership doesn’t make much sense. It’s not easy to bring home a year’s supply of Nesquik and paper towels without a ride, and even if you take a bus, there’s no room to stash hoards of kitchen supplies in a studio apartment.

Responding to tepid millennial demand, the big box giant is trying to win over youngsters by partnering with Google to deliver certain items right to your home. However, even Costco doesn’t seem all that excited about its new strategy.

“Don’t expect us to go to everybody’s doorstep,” Richard Galanti, Costco’s chief financial officer, told Bloomberg Businessweek. “Delivering small quantities of stuff to homes is not free. Ultimately, somebody’s got to pay for it.”

7. Weddings
Getting hitched early in life used to be something of a rite of passage into adulthood. A full 65% of the Silent Generation married at age 18 to 32. Since then, though, Americans have been waiting longer and longer to tie the knot. Pew Research found 48% of boomers were married while in that age range, compared to 35% in Gen X. Millennials are bringing up the rear at just 26%.

Just like with homes, it’s not that today’s youth just hates wedding dresses—far from it. Sixty-nine percent of millennials told Pew they would like to marry, but many are waiting until they’re more financially stable before doing so.

8. Children
It’s hard to spend money on children if you don’t have any.

After weddings, you probably saw this one coming, but millennials’ procreation abstention isn’t only because they’re not married. Many just aren’t planning on having kids. In a 2012 study, fewer than half of millennials (42%) said they planned to have children. That’s down from 78% 20 years ago.

Stop me if you heard this one: it’s not that millennials don’t want children (or homes, or weddings, or ponies), it’s that this whole recession thing has really scared them off any big financial or life commitments. Most young people in the above study hoped to have kids one day, but didn’t think their economic stars would align to make it happen.

9. Health insurance
According the Kaiser Family Foundation, adults ages 18 to 34 made up 40% of the uninsured population in the pre-Obamacare world. Why don’t young people get health coverage? Because they’re probably not going to get sick. This demographic is so healthy that those in the health insurance game refer to them as “invincibles.”

Since the Affordable Care Act, more millennials are gradually buying insurance. Twenty-eight percent of Obamacare’s 8 million new enrollees were 18-34 year-olds. That’s well short of the 40% the Congressional Budget Office wanted in order to subsidize older Americans’ plans, but better than the paltry number of millennials who signed up before Zach Galifianakis got involved.

10. Anything you tell them to buy
When buying a product, older Americans tend to trust the advice of people they know. Sixty-six percent of boomers said the recommendations of friends and family members influences their purchasing decisions more than a stranger’s online review.

Most millennials, on the other hand, don’t want their parent’s or peer’s help. Fifty-one percent of young adults say they prefer product reviews from people they don’t know.

Related: 10 Things Americans Have Suddenly Stopped Buying

MONEY 401(k)s

Millennials (With Jobs) Are Super Saving Their Way to Retirement

Laptop with cord in shape of piggy bank
Atomic Imagery—Getty Images

Young adults are outpacing Baby Boomers and Gen X when it comes to getting a head start on their 401(k)s.

You may have heard that Millennials are taking saving more seriously than Gen X-ers and Baby Boomers did at their age. But their financial prospects look much worse, given student loan debts, high unemployment, and shaky entitlement programs.

No question, Millennials face steep challenges. But it turns out, twenty-something savers who managed to land jobs (some 74% of this age group) are doing even better than you might have thought—and they’ve built a huge head start toward retirement security.

Those are the findings of a just-released study by Transamerica Center for Retirement Studies, which surveyed more than 1,000 Millennials in the work force. “Millennials have seen what happened to their parents, many of whom lost their jobs and savings in the financial crisis—and they are taking steps to avoid a similar outcome,” says Catherine Collinson, president of the Transamerica center. “We’re seeing an emerging generation of retirement super savers.”

Millennials have also benefitted from the widespread adoption of 401(k) auto enrollment, automatic contribution hikes, and target date funds, Collinson says. Some 71% of Millennials who are offered a 401(k) end up joining their plan. By being enrolled into 401(k)s as soon as they start their jobs (unless they opt out), many Millennials are being nudged onto the retirement savings path sooner than previous generations.

How much sooner? Some 70% of Millennials started saving for retirement at an unprecedented young age, just 22, the survey found. By contrast, the average Boomer began saving at age 35, while Gen Xers got started at 27.

Transamerica’s findings show that Millennials are contributing an average 8% of salary to their 401(k) plans; adding an employee match, they’re stashing a solid 10% of income into their accounts. Those findings echo earlier surveys of young adults, which have found that Millennials are saving more.

Those contribution rates are especially impressive, given that Gen X savers are putting in just 7% of pay before the match on average. Boomers are saving at a higher rate, 10% before the match, but they also have higher pay on average and are facing a looming retirement date. Some 27% of Millennials also said they raised the amount they contributed in the past 12 months vs. just 7% who decreased it.

Thanks to this early savings start, Millennials have amassed an average $32,000 in their 401(k) accounts, according to Transamerica. And unlike older generations they are relying heavily on professional advice to invest their money—some 62% use a managed account or target date fund, vs just 47% of Boomers and 56% of Gen X-ers.

Of course, most young adults have plenty of shorter-term financial worries. Some 27% say their top priority is covering basic living experiences, and 27% say they want to pay off debt. Only 16% listed saving for retirement as a top concern. Complicating matters, three in 10 expect to provide support for their aging parents or other family members.

Even so, Millennials are optimistic about their retirement prospects. A whopping 60% expect to retire at age 65 or sooner. That’s a stark contrast to the majority of Baby Boomers (65%) and Gen X (54%), who plan to work past retirement or never retire. But Millennials share the expectations of older generations in other ways—half plan to work the job in retirement, either full time or part time. When it comes to staying busy in retirement, there’s not much of a generation gap.

MONEY

Young Adults Mistrust the Advisers Who Want Their Trillions

Millennial investor with stock research reports
Cultura—Alamy

Wealth management firms fight to overcome Millennials' wariness of the stock market and the financial advice industry.

Wealth management firms are trying to get millennials excited about investing and hope to win their trust — and the sizeable wealth they are expected to control in the future.

Those now 21 to 31 years old will control $9 trillion in assets by 2018, and that will continue to grow, Deloitte estimated. Millennials also stand to inherit some $36 trillion by 2061, according to Boston College’s Center on Wealth and Philanthropy.

“We have a huge generational shift in wealth coming up,” Tom Nally, TD Ameritrade Institutional’s president, told Reuters recently. “We want to make sure our advisers are ready to serve next-generation investors.”

But it could be a tough sell: Millennials tend to leave their parents’ advisers when they inherit money, and they are leery of stocks. They “are the most conservative generation since the Great Depression,” reported a January UBS Wealth Management study, which found millennials keeping 52 percent of their savings in cash, compared to 23 percent for other generations.

To be sure, millennials are trying to save for homes, pay down student loans and pay the bills that come along with young adult lifestyles. But millennials tend to be distrustful of the traditional financial planning industry, even when they have money to invest.

“They don’t want to hear a sales pitch,” said Michael Liersch, head of behavioral finance at Merrill Lynch, the brokerage unit of Bank of America. Roughly 40 percent of millennials disagreed with the statement “advisers have your best interests in mind,” according to a Wells Fargo & Co survey.

GIVING MILLENNIALS WHAT THEY WANT

To appeal to younger clients, regional brokerage Raymond James Financial is training more new college graduates to be brokers. It will “exponentially” expand its current level of 100 participants over the next three to four years, Tash Elwyn, president of Raymond James’ private client group, said in an interview.

Morgan Stanley runs investment educational programs aimed at clients’ children who may someday need help managing inheritances. It also beefed up its social-impact investing to appeal to conscientious millennials, said Doug Ketterer, head of strategy and client management for Morgan Stanley Wealth Management.

Online broker TD Ameritrade runs TD Ameritrade U, an online program that teaches college students investing strategies and how to use the brokerage’s thinkorswim trading platform. It also offers clients recommendations from LikeFolio, a youth-friendly startup that generates sample portfolios based on what’s popular on Facebook and Twitter.

“(These platforms) pique interest and expose millennials to investing,” said Nicole Sherrod, managing director of active trading at TD Ameritrade. “It goes back to the ‘invest in what you know’ concept.”

That concept may be the one that wins over millennials like Kenny Quick, a 25-year-old Tampa, Florida, advertising executive, who bolsters his workplace retirement plan by skipping the advice and buying shares of companies he knows through deep discounter Scotttrade, Inc.

“I hold stock in Chipotle,” Quick said. “I feel like I eat there all the time, so investing in them felt like the next step.”

TIME career

Study: Most Millennials Would Dump a Friend to Get Ahead at Work

LinkedIn Website
LinkedIn Corp. logos are arranged for a photograph. Bloomberg—Bloomberg/Getty Images

Watch out for any "Me Generation" coworkers

On top of accusations that millennials are narcissistic and lazy, the generation now has a new criticism to address: They’re more likely to ditch work friends for the sake of a promotion, according to a recent LinkedIn survey.

The world’s largest online networking platform surveyed 11,500 full-time professionals from 14 countries about their work relationships. The results revealed a significant generational gap. While half of millennials (defined as professionals between the ages of 18 and 24) report that their work relationships make them feel motivated, 45% of professionals between 55 and 65 (or “baby boomers”) responded that such friendships had no effect on workplace performance.

But those warm and fuzzy feelings don’t necessarily translate into coworker loyalty. When asked whether they would sacrifice a work friendship for a promotion, 68% of millennials said they would while 62% of boomers said they would never even consider it.

“It’s a positive difference as far as I’m concerned,” Nicole Williams, a LinkedIn Career Expert, told TIME. “Ultimately, [millennials] feel that these friendships will either survive or there will be new friendships…I think there is a sense of competitiveness and that you need to be competitive in order to survive.”

Williams also said that the results could be affected by millennials’ expectation that they will work for several companies across their careers. “If you thought you’d be sticking around for 20 years, I think you’d be more conscious in terms of your relationships,” she says.

Boomers are also more likely to have started families of their own, while Williams suggests that millennials—fresh out of college and in a new environment—search for that closeness in their office relationships. “You’ve got boomers who have kids, who have husbands, parents they’re taking care of. They’re not as interested in the more social aspects of work,” Williams says. “For millennials, their professional relationships are kind of an extension of their family in a lot of ways.”

The idea of a “work spouse” comes to mind, a coworker possibly of the opposite sex with whom you share a platonic but extensive friendship because of a shared understanding in the work you do. Williams credits this very concept to the millennial generation. “Even the word ‘work spouse’ didn’t exist ten years ago, and I’m certain that the boomer generation wouldn’t conceive of their professional relationships being comparable to their partner, marriage relationships,” she said. “But you hear it all the time within this millennial generation.”

Still, knowing that many millennials would gladly ditch their work hubby for a shot at the corner office may leave a bad taste in some people’s mouths. Williams’ explanation for this trend is concise: “[Millennials] are using these friendships to advance themselves professionally,” she says.

Those after-work happy hours are looking less chummy.

TIME Culture

Millennials Are Proud of #Murica Despite Awareness of Its Flaws, MTV Says

MTV study challenges typical notions of young Americans

Search #murica on Instagram and you’ll get an eclectic mix of overtly patriotic content and photos parodying some less flattering perceptions of the United States. So an image of fingernails painted in red, white, and blue may exist right on top of a snarky note about a gas station where you can buy cigarettes, beer and fireworks all at once.

The contradictory way young people use this hashtag offers insight into the way millennials, a term typically used to describe people born in the 1980s, 90s, and early 2000s, think about America, according to new research conducted by MTV.

Of the 2,000 young people (ages 16-24) that MTV reached out to, 86% said they feel “proud to be American,” a fact that the “Millenials & #Merica” study notes contradicts Pew’s “Millennials in Adulthood” study earlier this year, which reported self-proclaimed patriotism to be at 49%. At the same time, MTV found that millennials are conscious of and concerned about the country’s problems.

This dichotomy can in part be attributed to the availability of differing perspectives in the media and online, Vice President of MTV Insights Alison Hillhouse told TIME.

For older generations, “any information was filtered through the nightly news, filtered through newspapers,” she said. “Millennials are so much more exposed to how other people think about the country on a daily basis.”

Nearly 90% of millennials ascribed equality and fairness as values they considered to be “American.” However, 80% said that sometimes the government acts in a way that makes it difficult to feel patriotic, and more than 50% said that the country has let them down personally.

Hillhouse said that the research, which collected data through focus groups, conversation, and other online methods, will help guide MTV programming as well as many of the company’s social initiatives.

This is based on a press release with key findings; the full study has not been released by MTV.

MONEY buying a home

7 Ways to Get Your Kid Out of Your Basement

College students slacking off and living in parents' basement
Adam Crowley—Getty Images

If your child is one of the 14% of millennials who have moved back in with their parents, here are some tips to nudge him (or her) out the door.

For most of us, leaving the nest was a rite of passage. We went to college, and then proudly headed out into the world to make our own way, while our parents turned our old room into another guest bedroom.

However, for a significant percentage of young adults, that rite of passage is now all about returning to the roost rather than flying solo. According to Gallup research, 14% of millennials (24-to-34-year-olds) have moved back in with their parents. The homeownership rate for those under age 35 was 36.2% in the first quarter of 2014, down from a historical high of 43.1% at the end of 2005, according to Census data. According to numerous economic reports on millennials, this is attributed to a weak job market, high cost of living, significant college debt, and other factors.

These kids, as well as any adult children who have decided to move back in with mom and pop are lovingly referred to as “boomerang kids.” Clearly the analogy is obvious.

For Mom and Dad, who would love to have the ‘kids across the hall’ become the ‘kids across town,’ here are seven pointers you might want to consider:

Start Charging Rent

Cut off the free ride. Yes, it sounds harsh, but you may be doing both you and your kid a favor. Managing money and a monthly budget is something that is not learned in school, and it is certainly not learned hanging out in your parent’s converted attic for free. Give your boomerang kids a real estate reality check. If the free ride comes to a screeching halt and they are paying rent, they will probably want to do it in their own apartment, closer to (or with) their friends, near downtown or a closer drive to their office. Charge rent and enforce it. Once they start getting that first-of-the-month monetary wake up call, it might shock their system enough to have them consider alternative arrangements. If they’re going to have a landlord no matter what, they’re likely to consider a new, more independent situation.

Collect Monthly Payments

Here’s another way to give them a foot out the door – but still a leg up. Start charging them monthly payments now. Let them know that they will have to come up with the monthly equivalent to local rents each month for the next six months. At the end of the six months, you will give them back all the money when they move out. That does three things: You teach them budgeting skills, you incentivize them to move, and you give them a financial helping hand on move-out day.

Be A Strict Landlord

No parties, no loud music, no guests after 10:00 pm. Keep the house rules strict. At some point, your kid is going to want to have a little independence, and some fun too. Living with a strict landlord may just be the incentive he or she needs to find a place of their own.

Set A Deadline…and Stick To It

If you can sense that your boomerang kid is riding out his or her free meal ticket under your roof as long as they can, help them visualize when that ride will end. Create a deadline for them to move out and stick to it, no matter what. It’s likely you never intended to have kids under your roof for more than two decades, so your children need to respect that…and they need to get on with their own lives. Even in a world where millennials are underemployed compared to their Gen X, Y and Baby Boomer counterparts, there are still plenty of ways for them to make a living that enables them to live with a roommate or two or three…elsewhere.

Help Them Get Organized and Overcome The Mental Hurdle

After all the financial aspects are considered, one of the biggest hurdles to making a big move is mental: it just feels overwhelming. So many things to do, buy and organize before it can actually happen. Your child may just need the expertise of someone who’s moved multiple times in their lives to talk them down off the “I’m too overwhelmed and can’t do this” ledge. Map out all the necessities and then make a list of the “nice to haves down the road” so they can see what’s an immediate need, and what can be done over the coming weeks and months.

Gift or Loan Them The Down Payment

Trulia’s latest survey showed that 50% of millennials surveyed plan go to their parents for help with the hefty down payment that’s required to purchase a home in today’s housing market. If you want your adult child up and out of your basement, consider giving them the financial head start now they need to form their own household and be independent.

Buy A Multi-Unit Investment Property

I am a huge proponent of purchasing multiunit properties, such as a duplex or triplex, because they are great investments. In the case of your “failure to launch” millennial, slot them into one of the units of your new property and rent out the others. The rental income is likely to cover much of the costs of ownership, and you’ll have a built-in property manager in the building to keep an eye on things. Plus, your boomerang kid is learning valuable management skills at the same time. It can be an investment property for you, and solve the “son or daughter is still in my basement” problem, all at the same time.

 

More on Financial Independence

4 Ways to Lighten Your Kid’s Debt Load

Is Living with Mom and Dad Starting to Cramp Your Style? Take These Steps to Independence

Taking Five Years to Earn a B.A. is Common—And Costly. Here’s How To Get Out in Four

MONEY First-Time Dad

Why You Should Get Up From Your Desk and Go Home

Luke Tepper
Luke is magically sleeping, while his father is fighting to stay still

We work way too much and see our families way too little. The latest on being a new dad, a Millennial, and (pretty) broke.

A couple of days ago I was on an airplane with my son. It may be a cliché, but there are truly few combinations as destabilizing as infants and planes. While other passengers may bristle at an infant’s shrieking hysterics, that annoyance pales in comparison to the sheer terror borne by the parents of the hysterically shrieking child.

(We know that you—passengers without children—are judging us. But more importantly, our kid is upset. So back off.) Anyway, Luke had a rough go of it on his first flight, so I was on DEFCON 1 for the return trip.

But he did great. Very little muss, almost no fuss. His calm allowed me to reflect on things other than what I’d do if Luke vomited on the lovely couple to my left, and I realized something: This vacation was the first time I had hung out with my son before 7 p.m. on a weekday for as long as I could remember.

Which sucks.

I love my job, but I rarely leave the office before 6:30 p.m. My commute is a little under an hour, and I usually stop by the grocery store to pick up dinner, so I’m lucky to get home before Luke’s asleep.

Of course, I’m not alone. Americans, by and large, work too long, take too few days off, and have problems enjoying their vacation time.

For instance, about one in nine U.S. workers puts in more than 50 hours a week, according to the Organisation for Economic Co-operation and Development. Less than 1% of Dutch employees toil that hard. In fact, citizens in only three out of 36 countries devote less time to leisure activities like sleeping and eating than Americans do.

Not surprisingly, America ranks eighth from last on the OECD’s Better Life Index.

When it comes to time off for good behavior, Americans get 14 vacation days a year on average, per Expedia’s 2013 Vacation Deprivation Study, or less than half as many as workers in France, Denmark, and Spain enjoy. But that’s not the really depressing part. The really depressing part is that while Americans receive more than two weeks of vacation, we take only 10 days.

One reason is that workers want to save vacation days for later, or convert them to cash. But 35% (the plurality) report having to cancel or postpone getaways because of work.

And once we’re actually on vacation, it’s hard to shut our minds off. Much to my embarrassment, I found myself checking emails and social media my first few days at the beach. I had to tell myself to close the browser and shut the laptop and go spend time with my loving family. It’s as if we’re paid victims of Stockholm syndrome.

I don’t want to sound cranky or ungrateful. I derive a fair amount of pride from my work, and more than eight in 10 U.S. workers say they are satisfied with their jobs. The cool thing about what I do is that I get to see a finished product after I’m done, which is affirming.

But I feel almost guilty if I’m the first to leave the office, as if I have it in my mind that I really didn’t work hard enough or suffer long enough that day. While this is an especially busy time for us here (with the launch of Money.com), I know that many of my friends feel the same pressure to stay well past closing time.

So I’m here to tell you, workers of America, that it is okay to go home when you should, and that there is nothing inherently better about working 50 hours a week than 40. Don’t feel less of a success if your friends put in more hours at the office than you do.

By repeating that mantra to myself long enough, I just might get home in time to put my kid to sleep.

More First-Time Dad:

 

MONEY 401(k)s

Get the Most From Your 401(k) at Any Age

To get the most out of your retirement savings, put the right amount in and take the right steps at all stages of life. Here's some advice to follow, whether you're just starting out or further down your career path.

 

Millennials

Millennials Start small, then auto-escalate. Less than half of workers ages 22 to 32 are saving for retirement, despite how painless it can be. Socking away 3% of a $50,000 salary ($1,500 before taxes) costs you less than $22 a week in take-home pay. Then take baby steps by auto- escalating your savings by one percentage point a year. In plans with auto-enroll and a 1% auto-escalate feature, nine in 10 participants are able to safely generate 60% of their age-64 income, adjusted for inflation, according to EBRI.

Take the easy way out. More than two in five millennials in retirement plans aren’t familiar with their investment options. No problem: Just go with a target-date fund, which automatically adjusts your portfolio to be less risky as you age. The worst-performing target-date investors at Vanguard earned 11.8% annually over the past five years, far outpacing the worst DIYers, who gained just 2.1%.

Roll over as you go. Twentysomethings typically spend 1.3 years at each job. And Fidelity says nearly half cash out 401(k)s when leaving. That triggers income taxes and a 10% penalty, depleting the amount that can compound. The box shows what that really costs you.

Gen Xers

Gen Xers Keep the bottom line top of mind. A funny thing about investing: The more you save and the bigger your balance, the more fees you have to pay in dollar terms. So now that your account has some serious money, shifting to lower-cost options such as an index fund is an easy way to save big (see chart). If you have $100,000 saved by 40 and underlying returns average 7%, the savings by 65 of switching from a 1.2%-fee fund to 0.3% is $102,000—nearly a whole second nest egg.

Shoot for 17%. How much you need to save depends on how much you already have. But 17% is a good mental anchor. That’s the number Wade Pfau of the American College of Financial Services came up with for folks starting from scratch at 35, with a 60% stock/40% bond portfolio, to safely fund a typical retirement goal. You might be okay saving less if the markets go your way, but Pfau’s number is what it takes to get there even with poor returns. That’s far more than the average 401(k) contribution of around 6% to 7%. But take a deep breath. That number includes the contributions from your employer.

Resist the urge to borrow. About 22% of participants between 35 and 54 in plans run by ­Vanguard have borrowed from their retirement accounts. Compared with other forms of debt, a 401(k) loan isn’t the worst. But the amount that you borrow is money that’s not compounding tax-deferred.

Baby Boomers

Baby Boomers Save in bursts. Neither saving nor spending runs along a smooth path. For example, you may have to pare back savings while paying the kids’ college bills. The good news is that “after 50 is when people should be able to save the most, as their kids are moving out, they’ve paid off the mortgage, and they should be in the highest earnings years of their lives,” says economist Wade Pfau. Starting at 50, you can also make extra 401(k) contributions of up to $5,500, on top of the normal $17,500.

Prep for the spend-down phase. Once you retire, you’ll have to spend out of your nest egg regardless of market conditions. Even if stocks do well on average, a bad run early on can deplete your portfolio. So “start taking a couple percent of equities off the table every year in the five or 10 years leading up to retirement,” says financial adviser Michael Kitces.

Readjust your target. According to polls, Americans expect to retire around 66. But the actual age of retirement is 62. Things happen: You may run into health issues or be forced into early retirement. Now many 401(k) savers use target-date funds. As you gain more visibility on your own retirement date, adjust the ­target-date fund you use. As the chart shows, it can make a big difference. Notes: Cash-out growth assumes a 5% annual return. Fee calculations are based on total costs, including forgone gains. sources: Morningstar, T. Rowe Price, SEC, MONEY research

MONEY Careers & Workplace

Why ‘Millennial Bashing’ In the Workplace Needs to Stop

This is the year we stop shaming Millennials at the office or, uh, wherever it is they work.

The volume of research on Millennials grows by the day, and we’re gradually learning that this much-maligned generation of 80 million is finding its footing on some important fronts—especially the workplace, where they overwhelmingly see their job as a means for doing good in the world.

Nine in 10 young adults believe they are actively contributing to an organization that is having a positive impact, according to the 2014 Millennial Impact Report from Achieve, a research and branding firm, and the Case Foundation, which promotes positive change. An employer’s position on giving back plays a big role at every stage of a Millennial worker’s career. The report found that:

  • What a company makes and sells is the top consideration for Millennials when applying for a job.
  • A company’s support for a cause is one of the most important factors in deciding whether to apply there.
  • Nearly half of Millennials had volunteered for a cause or nonprofit through their workplace in the past month.

Surpassing even baby boomers in number, Millennials are making their mark in a lot ways. They have different dreams. They are changing banking, and in some ways they are ahead of the game in terms of saving for retirement. But the workplace is where they are having the biggest impact.

A Hartford trend report called The End of Millennial Shaming notes that these young adults “are not kids anymore” and that this is the year “we end the Millennial bashing once and for all.” This generation is now invading the workforce and “taking on more and more leadership roles in business, government, communities and culture.” The Hartford found that 41% of Millennials already have four or more people reporting to them and that 78% consider themselves leaders in some part of their life.

The message to employers is clear: It is time to adapt to the next generation’s style of work. That means more collaboration, teamwork, flexibility and use of go-anywhere technology. It also means that companies that really are trying to solve the world’s problems will attract the best talent. Fulfilling passions and fully utilizing their abilities are among the top reasons Millennials cite for staying with a company, the research shows. From the Achieve/Case report:

Today’s forward-thinking companies are looking at the future of corporate social responsibility and how employee cause-work, company-branded volunteering and pro bono programs based on skills can play a role. For a company desiring to build a culture that resonates with this growing demographic of current and future employees, leveraging their passions is crucial.

The good news for employers is that the best talent is ripe for picking. Millennials have little sense of employer loyalty. More than half expect to have between two and five employers in their lifetime and a quarter expect to have six or more, PwC found.

And right now Millennials are feeling more burned out from work than any other generation. Among Millennials looking to switch jobs, 86% say they feel exhausted by their jobs. That compares to 76% of more experienced workers looking for a change, according to a Monster.com workforce talent survey.

The workforce will bend to this generation’s will, just as it largely equalized opportunity for women, made the office a home away from home, and adopted casual Fridays for 78 million baby boomers. What’s exciting about this next generation is that it really does want to make the world a more sustainable and peaceful place, and is calling on the resources of capitalism to deliver.

 

 

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