“Survey Reveals Financial Priorities of Younger Workers”

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In This Article:

• Most Say They Would Cut Retirement Savings First
• Artificial Intelligence by Any Other Name
• Most Expect to Pay Their Student Loan Payments Resuming This Fall

Most Say They Would Cut Retirement Savings First

Experian conducted a survey in August 2023, involving 1,020 millennial and Generation Z workers, to understand their retirement savings habits. The survey revealed that retirement savings are not a top priority for many under-40 workers, who are more focused on finding affordable housing, covering vehicle expenses, and paying down student loans.

When asked which expense they would skip if necessary, 53% of millennials and Gen Zers with student loans indicated they would reduce or eliminate their retirement savings contributions before missing a credit card or student loan payment. This choice, however, comes with its own set of challenges. Missing a credit card payment can lead to late fees, increased APR, and a potential hit to one’s credit score.

While resuming student loan repayments in October may not be appealing, many prefer to see their principal decrease or make progress toward forgiveness programs like the Public Service Loan Forgiveness (PSLF) program. However, suspending retirement savings contributions can have long-term financial consequences. For instance, assuming a conservative 5% annual return, every $1,000 saved can grow to $3,300 after 30 years. Delaying savings by just five years reduces that gain to $2,300.

Artificial Intelligence by Any Other Name

The survey also explored whether millennials and Gen Zers would trust their retirement savings to a robo-advisor or artificial intelligence. The results showed that most do not trust either option. Age did not significantly impact trust levels, but men were slightly more likely to trust computer-managed retirement savings.

Despite the skepticism, many well-designed retirement plans already incorporate elements of robo-advisors and AI. For example, target-date funds in most 401(k) plans pre-allocate investments based on the expected retirement year, gradually shifting from stocks to income-generating investments as the retirement date approaches.

Most Expect to Pay Their Student Loan Payments Resuming This Fall

As student loan repayments resume, most millennials and Gen Zers with student loans expect to begin repaying their loans. Income-driven repayment plans, which have been enhanced over the years, may help ease the burden by capping payments at a small percentage of discretionary income.

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Methodology

The analysis results are based on an Experian-created statistically relevant aggregate sampling of our consumer credit database, which may include the use of the FICO® Score 8 version. Different sampling parameters may generate different findings compared to other similar analyses. The analyzed credit data did not contain personal identification information. Metro areas group counties and cities into specific geographic areas for population censuses and related statistical data.

FICO® is a registered trademark of Fair Isaac Corporation in the U.S. and other countries.

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