The idealism of the millennial generation is readily apparent in Personal Capital’s latest survey of affluent families. The online survey of about 1,000 affluent investors, 18 or older with assets of $500,000 or more, discovered that millennials with children plan to spend more on their children’s college education and housing (including home purchases) than older generations.
Millennials are three times more likely to commit to defraying the entire cost of their child’s home purchase and two times as likely to contribute a full down payment compared with parents overall, the survey says. In addition, 70% say they’d place saving for their child’s education above saving for their own retirement. That’s a strategy that many experts don’t like because college can be partially financed with loans. Retirement can’t. In comparison, about half of all parents said they would adopt that strategy.
ThinkAdvisor’s recent article, “Here’s How Financially Naive Millennial Parents Are,” narrowed down PayScale’s starting salary rankings of 336 majors. Science and math are at the top.
In addition, roughly 56% of affluent millennial parents anticipate paying $100,000 or more for their children’s college education, compared with 42% of Gen X parents and 23% of baby boomer parents. A full 95% of millennial parents expect to help pay for their child’s graduate school education, with 60% providing $100,000 or more. However, the generous plans among millennial parents—who are yet to reach age 35 years of age—may change in the future.
The survey also found that 40% of millennials don’t have a retirement account, but plan to retire in 15 years with $450,000 worth of investable assets. This is a view that’s even more idealistic than the findings of the survey. The latest survey said that among affluent parents overall, about 20% plan to support their children into their 30s, with 12% ready to continue that into their children’s 40s. Almost all (97%) plan to leave an inheritance to their children, with approximately 90% planning on leaving $100,000 or more to their heirs.
It’s apparent that affluent parents, across generations, are feeling more pressure from their children to provide longer-term support, with mothers experiencing that pressure more than fathers. For example, 64% say their children expect or will expect them to pay for college compared with 44% of fathers, according to the survey.
Reference: Think Advisor (September 26, 2017) “Here’s How Financially Naive Millennial Parents Are”