They refuse to take the old advice. Economists and financial advisors are convinced the millennials are marching towards their financial doom, but the millennials are marching to the beat of a different drum than their baby-boomer parents…

Millennials are savings lots of money, but they’re not saving it for retirement. Here’s the report:

According to a Bank of America Merrill Edge study published Friday, today’s 18- to 34-year-olds are much more likely to prioritize travel, dining, and their gym membership over their financial future.

“Their ‘fear-of-missing-out’ (FOMO) mentality is also apparent in their spending habits,” the Merrill Edge report reads.
The study of more than 1,000 relatively affluent individuals found that 81% of millennials were more likely to spend on travel, 65% on dining, and 55% on fitness, than saving for their financial future.

Moreover, millennials aren’t thinking about retiring as early as possible; instead, they’re looking to have the most fulfilling life possible.

BUCKING THE OLD ADVICE

Not only are they focusing on entertainment, but they are job-hopping. This is contrary to the old American wisdom of staying with a company for life. Now, if you want a raise, changing jobs is the best way to get one. Wage growth is stagnant among long-term employees. Annual raises have to exceed 2.5% just to keep up with inflation. But raises exceed inflation for those who hop from job to job.

But financial advisors point out the problems that job-hopping causes: you damage your retirement savings.

It’s hard to establish and grow a meaningful 401k account if you job hop. Minimum waiting periods to entry, or incremental vesting periods, all these things work against you building your 401k account if you switch jobs every couple years. You gain a higher salary, but you save less for retirement. When you switch jobs, you’re tempted to cash out early and give the government its 10% “penalty” payment.

This points to the logical conclusion: millennials aren’t planning to retire. That’s the secret truth that no one wants to say in public. Social Security? Medicare? The federal government will have gone bankrupt long before the millennials make it to “retirement age.” Before these middle class welfare programs were inacted, people only retired when they weren’t physically able to work any longer.

When the middle class welfare programs go belly up, then people will once again return to the old way of doing things: working for as long as they are capable. Millennials have implicitly figured this out. They are spending their money on travel now, while they are young. They aren’t waiting until retirement, because they understand that they aren’t going to be able to retire. So who cares about a 401k? Why put money in one if it’s just going to be eaten up by pre-payment penalties and the occasional stock-market crash. What matters is higher salary.

LOOKING FOR FREEDOM IN ALL THE WRONG PLACES

The problem is, they’re doing the right things, but for the wrong reasons. They’re saving more money, not to leave behind an inheritance to their children (much less their children’s children), but to travel and live the fun lifestyle they always imagined. “Financial freedom,” one article calls it.

Speaking of children, it seems millennials aren’t very family-minded. A survey showed that only 41% consider marriage a priority, and even less (36%) are focused on being parents.

Family formation is crucial for the survival of a society. Family formation requires people to be future-oriented. Raising children is difficult work. There are lots of challenges thrown at parents on the front end. This tends to force uncommitted families to discount the future benefits, on the backend.

Millennials today can see that the deck is stacked against them. Their college costs are exhorbitant. They are in student loan debt up to their eyeballs, and for what? Pieces of paper, called “degrees,” that don’t get them the high-salaried jobs they were promised. At least not when compared to their debt load.

Engineering can be different, but not even a medical degree or law degree guarantees a new graduate landing in the plush fields they were promised as children. And let’s face it, being an engineer, while an extremely practical career choice, isn’t nearly as glamorous as being a doctor or a lawyer. It’s also extremely math-intensive.

Thanks to Common Core, engineering school will only get harder and harder on subsequent generations of public school graduates.

Millennials understand they aren’t going to retire. But what they haven’t yet figured out is that they’ll need their own children to take care of them in their old age.