The headline is unfit not to click on: “Study: Millennials Spend More On Coffee Than On Saving.” Neither could media outlets resist: search on a pretension and you’ll find hundreds of newspapers and websites repeating a formula of this new “study.” Millennials – now in their late 20s and early 30s – spend some-more on their mochachinos than they’re putting divided in their 401(k)s. Yet some-more justification that people only aren’t well-equipped to ready for retirement.
But is it true? Spare me a Survey Monkey, that was a source of a story’s headlines. Is there real data to behind it up?
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To find out we incited to a Consumer Expenditure Survey (CE), a sovereign government’s categorical information source on how most Americans spend and what they spend their income on. we looked during information on households aged 25 to 34 in 2015 – basically, your Millennials.
On average, any year Millennials put $5,879 toward “pensions and Social Security,” as a CE puts it. Since what we wish is their grant contributions, we looked during their normal warranted income of around $62,000 and corroborated out what they would have paid by a 6.2% Social Security payroll tax. Deducting payroll taxes from a “pensions and Social Security” sum left me with annual grant contributions of $1,880.
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So, does a normal Millennial domicile spend some-more than $1,880 per year on coffee?
Unfortunately, we can’t contend for certain. The Consumer Expenditure Survey doesn’t give us a minute relapse of how Millennials spend on food outward of their homes. However, a CE does find that a normal Millennial domicile spends $3,097 any year on food divided from home. So, if we can trust that Millennials spent 61% of their away-from-home food dollars on coffee, afterwards a title outcome might be true.
Do we trust this? Well, $1,880 per year on coffee is over $5 per day, every day, for every Millennial. What does that leave for cronuts? And Chick Fil-A? And Chipotle, during slightest before a E. coli? And – if this survey is to be believed – Red Lobster??
We know there are some Millennials who are saving positively zero for retirement. If these youngsters so most as step feet inside a Starbucks then, yes, they’re spending some-more on coffee than they’re saving.
As a group, though, we found in a new American Enterprise Institute study that Millennials are indeed improved retirement savers than Gen Xers or even a Baby Boomers. They’ve started saving progressing in life than comparison generations did, according to a TransAmerica survey. And, according to information from a Survey of Consumer Finances, relations to their gain Millennials have 18% some-more set aside in retirement accounts than GenXers did during a same age.
So reason your heads high, Millennials. You’re doing okay.