🔒When it comes to retirement investing, Gen Ys and boomers may be more alike than not

Millennials are hopeful, want meaningful work, value diversity and are tech savvy. Baby boomers are optimistic, work in teams, are ambitious and tend to be workaholics. So says the American Psychological Association.

But the stereotypes for the two groups surrounding money and retirement savings aren't so glowing. Boomers, born from 1946 to 1964, hold the wealth, don't care about younger generations and are famous for fumbling with cell phones and other technology, according to Merrill Edge and others. Millennials, also known as Generation Y and born from 1979 to 1996, are coddled, won't wear suits and have so much debt from college and other expenses that it eats through half of their paycheck.

Wealth managers acknowledge some of those differences, but say key life experiences, particularly the recent recession and down markets, bring the two groups' thinking closer together when it comes to saving money for retirement.

“The millennials experienced a significant market drop, and saw their parents and grandparents impacted for a period of time from 2008 and in the early 2000s. They also were impacted by that,” says Kristen Robinson, senior vice president for Fidelity Investments' Women and Young Investors for Personal Investing unit. She is responsible for leading the strategy to focus on women and millennial investors, and is based in Smithfield, R.I.

“So that was in the very formative years for the millennials,” she says. “And in their formative years, baby boomers heard about the 1929 Depression and market collapse.”

Both demographics experienced significant economic trauma at a sensitive age. “That impacted how they feel about money,” she says, noting both generations may be more conservative than generally thought.

Comparing the two groups has another foundation: this year, millennials will surpass boomers as the nation's largest living generation, according to a Pew Research Center Study earlier this year citing U.S. Census Bureau population projections from last December. The numbers show that millennials will number 75.3 million, surpassing the 74.9 million boomers. Generation X, born from 1965 to 1978, will outnumber boomers by 2028.

Lax finances?

The financial crisis from 2008 through most of 2013 took a toll on investors, especially females, according to Fidelity. Some 12% of Gen Y females polled said they are confident about assuming their own financial responsibility compared to 51% of boomer females, says Robinson. “We are focused on helping with that confidence gap,” says Robinson, noting Fidelity has a program called “Thrive” aimed at helping women of all ages with their finances. Thrive includes online information, webinars and sessions at the workplace and at Fidelity's investor centers.

The top three reasons millennial women don't feel they can handle their finances is they don't have the experience, they haven't done enough financial research and they don't know how to get started.

“We help them get started and establish a budget,” Robinson says. “They can invest in the future at the same time they are paying down debt.”

Still, more than half of millennials already are saving for retirement, she says, with some relying on their parents for advice and others — about one-third — going it alone. According to the recent Fidelity “Five Years Later” study looking at behaviors before and after the recession, 81% of millennials now feel they are more knowledgeable about their finances, while 66% of older generations do. Importantly, 55% of millennials feel more confident as investors and 64% save more systematically. Only 47% of older generations are more confident as investors, while 54% say they save more systematically.

In terms of retirement preparation and involvement, 82% of millennials said they will have a much harder time achieving financial security then their parent's generation, just a nudge higher than the 80% of boomers who responded similarly to the 15th Annual Transamerica Retirement Survey released last fall. Only 66% of millennials said they are very involved in monitoring and managing their retirement accounts, compared to 72% of boomers. Almost double the number of millennials — 52% — said they prefer to not think about saving until closer to retirement compared to 26% of boomers.

The study also found that about a quarter of millennial and boomer workers each are not sure how their retirement savings are invested. In Transamerica's calculations, however, boomers, not surprisingly, had a heavier mix of stocks and bonds, while millennials had more stocks.

“Many millennials began entering the workforce coincident with the Great Recession,” Catherine Collinson, president of Transamerica Center for Retirement Studies, said when the study was released. “It might be easy to conclude that their prospects for achieving a financially secure retirement are iffy at best … our research found employed millennials to be an emerging generation of super savers.”

Recession carryovers

Some boomers still have a bad taste in their mouth from the recession.

“As we look at boomers, their observations of 2008 aren't distant memories,” says Michael Iacobucci, regional wealth leader for northern New England at TD Wealth based in Manchester, N.H. “At the top of their mind is how easily and severely things can go south.”

Boomers in particular have started to look for steadier portfolio growth, trying to avoid the wide swings typical before and during the recession.

“Many clients are willing to trade upscale return for less of a downside,” he says. Coupled with that, especially for those on a fixed income, are historic low interest rates and still volatile stocks.

He does see a trend toward more transparency by family elders, who previously might have kept finances close to the vest, now trying to explain money matters to the next generation. He says TD Wealth works with millennials mostly through existing relationships with their parents.

Two elements enter conversations by both generations. One is to keep the basic understanding of wealth accessible and easy, and the other is that each generation doesn't want to burden the other, whether it be financial or other types of support.

“Prior generations were more private about investments,” Iacobucci says. “Families are now multigenerational, and people are living longer.”

He notes he is seeing some millennials, known for being tech savvy, look for more ways to use technology for financial planning, including online services.

And anticipating expected guidance by the Federal Reserve Board that would raise interest rates, he says, “Change creates a need for advice. The question is, 'How do I adjust?'”

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