Knowledge. Shared Blog

October 2019

Marching to a Million: How Millennials Save

In our latest “Marching to a Million” video, we ask millennials working at Janus Henderson how they’re saving for retirement and why they feel it’s important to start planning for the future now.

Key Takeaways

  • Our millennial colleagues have gotten an early start on building their retirement nest eggs by participating in their company-sponsored 401(k) plan and – in some cases – using other savings vehicles.
  • Using financial apps that automate saving and investing are also popular among this tech-savvy generation.
  • A common theme that emerged in our interviews was an understanding that putting small amounts away consistently and early on can amount to a substantial sum over time – which is why it’s so important not to delay saving for the future.
View Transcript

How are you saving in your 401(k)?

Caitlin: Our company matches 5%, so I’ve always been at at least 5%. Because who am I to turn away free money?

Hadley: Off the bat, I played it pretty safe. What seemed like the most sense to me at the time was to at least do the amount that they would match, so that’s what I did. I started with that 5% just to at least have a baseline there. And as I’ve realized what I want my retirement to look like and what I’m comfortable leaving for discretionary income, I boosted that up to 8%.

Nadia: I talked to my dad, and he was basically just, like, “You know what? You’re young, you don’t have a lot of things you need to pay for. So he’s like, elect a higher percentage now because in the future you probably won’t be able to do that because, you know, you might have kids, you might have a house to pay for. So I think currently I have about 10% of my paycheck going towards my 401(k). If I were to have the money instead, I’d probably spend it on something else, or not save it properly. So I think that’s the best way to go about saving.

How else are you saving?

Caitlin: I have a savings account with my bank that has just enough to cover like three months’ expenses, just in case I ever find myself unemployed. I have a Roth IRA in a brokerage account that I contribute $50 a month to, sometimes more if I can. And I also have a non-retirement brokerage account, also $50 a month, sometimes more if I can. But I automatically put money into those accounts every month, like putting money into my investment account, so I consider that a bill that has to be paid.

Nadia: I have a personal savings account, which I usually typically allocate 15%-20% of my paycheck [to], so… And then other than that, I have this app where it basically just withdraws your loose change and then invests it. And then I have another app which basically each day will withdraw a certain amount of money from your checking account so that you can add it to your savings account, or, you know, if you need to pay your credit card off that month, or something like that, that you have that money there. So those are the couple things that I probably do to save and invest, other than my 401(k).

Because I think, with my generation, a lot of people don’t have big chunks of cash to go ahead and invest, and they kind of want something that will allow them to invest a little bit of money pretty frequently. So I think that’s kind of what I was looking for, and I read about a few different apps.

Why do you think this is important?

Hadley: I’m very fortunate in a sense of, I’m able to save for my retirement, have a savings, and still participate in all the travel that I feel like I desire right now. And I would say that traveling the world has become this huge thing for people my age … seeing other countries … And while I do believe that’s important, I believe that putting yourself in a financially secure place to set you up for life is so much more significant, so much more important.

Kilian: I think understanding the importance of saving and preparing for your future … I think a lot of people my age might take the approach of, “I want to live in the here and now, and go do things, then I’ll think of kicking the can down the line, and figuring it out later.”

Nadia: If you’re able to save that little chunk of money now it’s going to expand into a lot more when you’re mid-50s, 60 years old. Just because, when I started saving for my 401(k), I kind of looked at, you know, it’s taking out this amount of money, I could use that. But then I was like, I’m just going to use it on things that I don’t need, but I do need money in the future when I do retire, because I won’t have a job, and I’ll need to pay for things in a certain way. So, I think if you just kind of look at it as like, “Hey, it’s this little amount of money right now, it’s going to be a lot more in the future,” I think that can be a really positive thing.

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