David I Gensler, MSPA, MAAA, ACOPA, EA


Well OK. Chicken Little notwithstanding, the sky is not actually falling. But for millennials, it might as well be. The barrage of depressing news coupled with the fact that the impact of climate change seems to be accelerating leaves many of them to be pessimistic about the future. 88% of them (the highest percentage of any age group) accept climate change as a reality. 69% of them see it as a reality that will impact them in their lifetime. Overwhelmed by what seems to be an uncertain future, saving for retirement feels to them like a useless endeavor. Many of them have become fatalistic. One millennial, a 27-year-old New Yorker said that while she wants to be optimistic about the future, when she looks at the way that climate change seems to be impacting our weather and the peril it is bringing to both animal and ocean life, the future looks bleak. Many millennials have a mindset that says why save for retirement when all you see is a dystopian future?

As a group, the millennials are defined as those people born between 1981 and 1996. A study published in March in the Journal of Abnormal Psychology found that the number of millennials reporting major depression increased by 52% from 2005 to 2007. Older adults did not experience any increase in stress and some age groups experienced a decrease (probably because we forgot what we were supposed to worry about). Millennials are afflicted with something called “eco-anxiety.” Simply stated, it indicates a high degree of anxiety directly connected to the certainty of climate change. The American Psychological Association found that 72% of those participating in a study it had done, indicated that the inevitability of climate change affected their emotional well-being.

Two-thirds of millennials have nothing saved for retirement. Zero. Zip. Nada. Most millennials say that they are not saving for retirement because they simply cannot afford it. And after being strangled by student debt and the high cost of living in their beloved hipster urban centers, for them saving for retirement is a daunting task. Those that do save had an average account balance of $25,500 and were deferring 7.3% of their salary (Figures from a Fidelity study). Those statistics are not terribly encouraging. And remember, those numbers are only for the one-third that are saving something for retirement. For the majority of millennials not saving for retirement their reason is directly linked to the feeling that there will be no future to save for.

But is that just a convenient excuse? Saving for the future rather than using it now is a difficult concept for human beings to wrap their minds around. Hard wired into our hunter-gatherer ancestors’ brains is the concept that people need only as much as they can carry to the next location. Their future was as meaningful to them as nuclear fusion is to a cat. We carry that concept as part of our DNA.

Brad Klontz, an associate professor of practice at the Financial Psychological Institute says that when saving for the future people need to home in on either positive visions of the future or extremely negative ones. People who have lost a lot of weight are a good example. They either lose the weight because they picture their future thinner selves; wearing trendy clothing and being more attractive or perhaps their doctor told them that unless they lose 50 lbs. they won’t dance at their daughter’s wedding. Those individuals that can create specific optimistic visions of what retirement will look like (where they will live, who they will share it with, how they will spend their time) are more likely to save. Alternatively, Klontz feels that perhaps people can be scared into saving for retirement. One thing worse than having no future is having a future and not being prepared for it.


Based upon a June 3rd article in the Wall Street Journal