Millennial is the name given to the generation born between 1981 and 1996, dates now clarified by the Pew Research Center, although some have seen them as starting in 1980 and being born as late as 2004. Also known as Generation Y (Gen Y), the Millennial generation follows Generation X, and in terms of numbers, has edged out the Baby Boomers as the biggest generation in American history.

Millennials are so named because they were born near, or came of age during, the dawn of the 21st century – the new millennium. As the first to be born into a digital world, members of this group are considered “digital natives.” Technology has always been a part of their everyday lives – it’s been estimated that they check their phones as many as 150 times daily – and serving them has been a major contributing factor to the growth of Silicon Valley and other technology hubs.

Research has shown the Millennial generation to be the most ethnically and racially diverse in U.S. history. Gen Y tends to be progressive in their political views and voting habits and less religiously observant than their predecessors, Gen X.

 

Millennial Economic Picture

Millennials face the most uncertain economic future of perhaps any generation in America since the Great Depression.

Three decades of stagnant wages were followed by the Great Recession (which left over 15% of those in their early 20s out of work), and the income and the net worth gulf between the rich and the middle class is at its highest level in the past 90 years. Though the job market has improved in recent years, Millennials face wage stagnation thanks in part to a 20-year trend of decreasing labor market mobility. Labor market mobility started to stagnate in the year 2000, just as the oldest Millennials were entering the job market. When workers don’t move around, both from job to job and from region to region, employers have more power when negotiating wages – a phenomenon called monopsony – which translates into employees getting paid less.

Unfortunately for young people whose careers coincided with this trend, it’s difficult to make up lost earnings from early, slow years. The effect of initially low earnings is compounded when subsequent raises are lower and people are less able to save and invest in ways that would provide income in the future.

Add to this financial reality the record amount of debt (mainly from student loans) this generation is carrying, and you have the makings of a severe economic dilemma. Although they have frequently been labeled as materialistic, spoiled and saddled with a sense of entitlement, it is not without justification that many Millennials feel they will not be able to achieve life goals such as finding their dream job, buying a house or retiring until much later in their lives than previous generations did.

 

Can Millennials Retire?

Part of the problem seems to be that a good percentage of Millennials – 26% total – are hoping that either their lottery ticket purchases will pay off or that they’ll inherit money to use toward retirement saving, according to a 2015 survey by the Insured Retirement Institute and the Center for Generational Kinetics. With such unrealistic expectations, a good quarter of them will likely struggle financially during retirement years.

Another cause for concern: A full 70% of the folks surveyed believed as retirees they’ll be able to survive on $36,000 a year. The problem with this perception is that in 2016, the average yearly expenses for those ages 65 to 74 were $48,885 a year, according to the Bureau of Labor Statistics.

Furthermore, by the time Generation Y retires, that $36,000 won’t buy what it used to: “With the cost of goods, food and housing at such inflated prices now, Millennials will not be able to live off of $36,000 a year in retirement. Based on an inflation rate of 3%, the value of $36,000 today will be reduced to $14,831.52 in 30 years,” says Carlos Dias JR., wealth manager, Excel Tax & Wealth Group, Lake Mary, Fla. The disparity in perceived retirement funding needs could easily lead to financial disaster for retirement-age Millennials.

A third factor that could leave Millennials vastly underprepared for retirement is their avoidance of the stock market. A Bankrate survey found that only 33% of people under 30 owned stocks in 2016 – largely due to a lack of funds, though the Great Recession and the market losses Millennials lived through and watched the experience and this has left some of them fearful about investing in equities. In fact, another survey from Bankrate found that Millennials prefer cash three times as much as stocks for long-term investments. While their wariness is understandable, it’s also detrimental: The stock market, over the long haul, has produced return rates hovering in the 10% range; and those who start investing young benefit from those extra years.

 

How Millennials Invest

While Millennials can sometimes be wary about investing, the availability of social media tools is making it easier and more comfortable for this age group to learn – and in fact, a survey from asset manager BlackRock found that 45% of Millennials are more interested in investing in the stock market today than they were just five years ago. In an effort to make certain they do not experience the same problems as previous generations, Millennials are approaching investing in an entirely different manner from parents and grandparents. While Baby Boomers only put away an average of 11% for investing, Millennials who can save put away as much as 18%, the BlackRock survey found.

Given their love for anything tech-related, it should come as little surprise that Millennials are taking advantage of a variety of high-tech and social media tools that allow them to plow their wealth into the investment vehicles of their choice. They are now leveraging social networking platforms, websites, and mobile apps to do everything from following stock-picking tips to finding financial planners.

No longer are stock tips being passed along on the golf course. When Millennials want to purchase shares, they do not reach for the telephone to ring up a broker (they tend to be somewhat distrustful of financial professionals anyway). Today, all it takes are a few clicks on an app for Millennials to review a prospectus, get advice, and even commit funds, and they reward companies that let them do so. According to The Wall Street Journal, more than 30% of Millennials surveyed recently stated they are more loyal to brands that are up-to-date in regards to technology. Factors such as social responsibility and environmental responsibility also frequently play a key role in where Millennials place their money.

People under the age of 35 are more likely to take advantage of online tools for monitoring their investments, too, E*TRADE reports. With such tools, investors are able to review their portfolios anytime they desire rather than waiting for quarterly reports to arrive in the mail, and this group takes full advantage: The BlackRock report found that while Baby Boomers spend only an average of two hours reviewing their investments each month, Millennials dedicate up to seven hours per month (small wonder that a report from Forbes found that over the past few years more than $1 billion has been funneled into tech-related personal finance companies, particularly startups that target young investors with mobile-enabled, user-friendly software and platforms).