If you’ve gotten a sense that Millennials, folks born between 1980 – 2000, seem to be a little clueless or delusional about money, you might be right!

It’s common practice for every generation to hate on the next younger generation. You should see the attitudes my fellow 65+ year old condo owners have towards the sub 35-year-old owners during our annual HOA meetings. It’s as if the younger owners don’t deserve to have the same rights as the older owners, even though the younger owners paid way more for their properties.

Given that roughly half of Financial Samurai’s readership is between the ages of 18 – 35, the proposition that Millennials don’t care about money doesn’t seem to mesh with reality. Most of you guys care a great deal, which is why you’re here. But let’s unearth the real reason why those other Millennials just don’t seem to give a damn about money, shall we?

WHY MILLENNIALS DON’T CARE ABOUT MONEY

After Personal Capital released its Retirement Planner, they anonymously analyzed the data of hundreds of thousands of users who proactively decided to test out the free tool for themselves. Each user inputs their future income expectations (raises, inheritances, windfalls) and expected expenses ($60,000 mid-life crisis car in 15 years, $250,000 in college tuition in 20 years, etc), and the Retirement Planner runs a Monte Carlo simulation with your existing linked data and new inputted data to come out with your expected retirement cashflow. Below is an example of my Retirement Planner output.

Below is the data that came out from the Retirement Planner user analysis.

Retirement Readiness By Region & Generation

Delaware is the #1 most prepared state for retirement with the highest average amount of savings to date at $286,277.

Connecticut is the #2 most prepared ($279,367 is the average amount saved).

New Jersey is the #3 most prepared ($272,918 is the average amount saved).

California falls behind with only $227,290 saved, landing in the #20 spot overall.

East Coasters are the most interested in paying for their education goals: New Jersey, Massachusetts and New York rank as the top 3 savers for education expenses.

Average savings for a 4-year education by New Jersey, Massachusetts and New York are $199,039, compared to California at #5 with an average of $174,684.

Baby Boomers have an average of $554,805 saved for retirement. This is 125% more than Gen X ($246,924) and over 700% more than Millennials ($68,971).

Millennial Specific Data On Retirement Readiness

Everything we’ve read so far seems to make sense. The older East Coast is the richest region in America, while older generations have more saved up for retirement. Let’s now focus on the Millennial-specific data to see where things go askew.

Home Purchase Spending: Millennials expect to spend just $142,274 on a home purchase compared to $686,739 inputted by Gen Xers.

Millennials expect to spend just $142,274 on a home purchase compared to $686,739 inputted by Gen Xers. Vacation Spending: Millennials expect to spend $325,357 on vacations by retirement.

Millennials expect to spend $325,357 on vacations by retirement. Number Of Working Years: Millennials expect to work 15 years on average and retire (hmm)

Millennials expect to work 15 years on average and retire (hmm) Retirement Savings: Millennials plan to save $445,687 after 15 years of work

Millennials plan to save $445,687 after 15 years of work Inheritance: This is the biggest mystery of all. Continue reading to find the answer.

It’s clear Millennials are seriously divorced from reality! Sure, it’s natural to input more aspirational figures in any retirement plan, but a whole lot of people will be disappointed with such aggressive assumptions. Let’s go through the points one by one. Remember, Personal Capital has close to one million users, most of whom are college educated, and are comfortable with using technology.

Home Purchase Spending

The median home price in America is ~$220,000. Based on a $142,274 budget, it looks like Millennials are all planning on living in the Midwest (investment opportunity!). The locations of Personal Capital’s Millennial users are heavily concentrated on the large coastal cities.

You cannot buy anything in the entire San Francisco Bay Area for $142,274. Good luck getting anything reasonable for $142,274 in San Diego, LA, New York, Miami, Boston, Seattle, or Washington DC and its suburbs either.

Number Of Working Years

The average American works for ~40 years until they retire. Somehow, the average Millennial thinks they’ll be able to work for 15 years and hang up their boots. Does the average Millennial plan to start a personal finance site like Financial Samurai or something? It’s not a bad idea since you’ve seen real income profiles of financially free people who’ve done just that! Given the average Millennials’ retirement savings in this survey is only $69,000, retiring in 15 years seems unlikely.

With the median life expectancy climbing to over 80 for both men and women, it’s going to take a lot more money to support a 40+ year retirement lifestyle without work. Even with a frugal $30,000 a year for living expenses, the Millennial would need at least $1,200,000 in savings after retiring at age 37 – 49 (age the person was surveyed + 15 years), and that’s assuming zero expense inflation.

Vacation Spending

$325,357 in vacation spending just sounds insane, even if the $325,357 was spread out over a 40 year career to equal $8,133 annually. But remember, these Millennials plan to work for only 15 years and then retire. Hence, instead of spending an average $8,133 a year for 40 years on vacations, they will spend a whopping $21,690 a year on vacations during their short careers. Party on baby! Where’s that Crystal on my yacht in Ibiza?

Retirement Savings

Millennials plan to have $445,687 saved up by retirement. That’s not too shabby, especially if you have a pension or Social Security starting to kick in at 62. However, Millennials only want to work for 15 years! To save $445,687 in 15 years requires $29,712 saved up per year. It can be done, but it will take discipline. But if you’re spending $8,133 – $21,690 a year on vacations, you aren’t being very disciplined at all!

Inheritance Expectations

By now, you’re wondering what type of dope Millennials are smoking to be so far divorced from reality. Well here it is folks. The secret to everything! The average Millennial who tried out the Retirement Planner expects to inherit $1.06 million – twice as much income as from their paychecks! No wonder why they don’t care about working more than 15 years, plan to spend $21,690 a year on vacations, and only pay $142,000 for real estate. Their parents will hook them up!

Maybe they’re thinking they’ll spend $142,000 on just the remodel. And given Millennials won’t have a mortgage to pay, they can just kick back with their retirement and vacation funds until they get an extra income boost from their 401k and Social Security.

It’s all so clear to me now why Millennials emphasize “following their passion,” and “doing meaningful work,” even if they haven’t put in their dues. The data from hundreds of thousands of well-educated, technology-savvy Millennials from all over the country does not lie!

DELUSIONAL OR WISE?

Perhaps these Millennials aren’t delusional. I used to think hard work was the main ingredient for financial success. Now I believe hard work plus rich parents equals success!

Given the parents of Millennials have invested in the biggest bull market in history, it’s logical to conclude that Baby Boomer parents have a ton to give. $30 trillion in generational wealth transfer is estimated to pass from Baby Boomers to their Millennial children over the next several decades. That buys a lot of entitlement.

I’ve seen plenty of parents either bequeath their own properties to their adult kids or pay the downpayment on a new property for their adult children. Seven of my neighbors in Golden Gate Heights, San Francisco didn’t pay for their house thanks to their parents. I am the only donkey who decided to work 70+ hours a week while saving 50%+ of my after-tax income to buy my own place. I should have just asked my parents for the downpayment.

Let’s be honest. If you expected over a $1 million inheritance, would you bother to try so hard? I doubt it. It’s partly because I knew my parents weren’t rich that I’ve been so determined to make ends meet on my own.

What kind of inheritance expectations did you input into the Retirement Planner? How do we prevent our kids from being unmotivated, non-productive members of society if we have a significant amount of wealth to pass on? Millennials, what have you noticed about your peers when it comes to money? Have you called your parents lately?

Would you work as hard or save as much if you expected a $1M+ inheritance? Heck no! Why bother killing myself when my parents killed themselves for me already? No use both of us suffering for decades!

I'd probably slack off a little with my savings and be super picky with the type of work I do. With $1M+ coming my way, there's really no need to try so hard.

I would work just as hard and save just as much if I had nothing coming my way. I want to prove to myself and to others I can create my own wealth!

If I knew $1M+ was coming my way, I'd tell my parents to keep the money and spend it on themselves. They deserve it. I don't. I want to work for my money.

Other. Feel free to share in the comments section. View Results

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Updated for 2019 and beyond.