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“If you don’t save money, you’re screwed”: Why millennials are saving more

When it comes to amassing personal savings, what age group is putting away the biggest part of their income for the future? The answer may surprise you: millennial workers now lead the pack when it comes to saving.

That’s according to a survey conducted in March by, which found that 62% of Americans in the millennial generation (here defined as ages 18-29, or as researchers Neil Howe and William Strauss initially defined as those born between 1982 and 2004) save at least 5% of their income each year. That’s a big jump from a similar survey last year, when found 42% of millennials hitting the 5% target.

For adults over the age of 30, only about half manage to save that much.

The explanation for younger workers’ more aggressive saving strategies may stem from the U.S. economy’s performance over the last decade.

Many millennials were coming of age and entering the workforce in the years just before and after the turmoil of the 2007-2009 recession, which was followed by a time of slow recovery. That experience may have underscored for them the importance of saving for the future (much like Americans in the first half of the 20th century carried the memories of the Great Depression through their own lives).

“Millennials have a greater inclination toward saving, for both emergencies and retirement, than we’ve seen from previous generations,” explains Bankrate Chief Financial Analyst Greg McBride, CFA. “Much of this is attributable to the financial crisis and Great Recession coming during the financially formative years for many millennials.”

Moreover, anecdotal evidence suggests millennials have embraced a more self-sufficient view of savings-they don’t necessarily trust that government programs like Social Security or defined-benefit pension programs will be there to support them as generously as it has seniors today and in the past.

“We’re not counting on the government,” 32-year-old Baltimore entrepreneur Giovanni Marcantoni, who reports saving 20% of his income, tells the Baltimore Sun. “We’re not counting on companies. We’ve seen that if you don’t save money, you’re screwed.”

One caveat: even though millennials may outpace other age cohorts in their 5% savings rate, that rate may still be too low, some experts caution.

One good rule of thumb many financial professionals suggest is to save 10% of your income to ensure a comfortable retirement. The Bankrate survey found that only 28% of survey respondents (representing all age groups) said they are saving 10% of their income. So there’s definitely room for improvement for all age groups when it comes to saving.

Still, the millennials are on the right track. Developing good savings and investing habits early in one’s working life can pay big dividends later, since your investment will have more time to grow (and to ride out the inevitable ups and downs of the market cycle).

And while young workers faced a challenging jobs environment since the recession and slow recovery, many appear to have adapted and embraced the right behaviors to set themselves up for long-term success. As they advance in their careers and see their earnings grow, they’re more likely to carry those forward-looking savings habits with them.

Young workers face plenty of challenges. We’ve written before about how debt loads-particularly student loans-have had a negative impact on many young workers, making it difficult for them to start families, buy homes, and pursue their dreams of starting their own businesses. Moreover, not all today’s young people are getting the opportunities they need.

At the same time, the Bankrate survey result suggest a potentially more promising trend line, indicating that many young Americans are thinking long-term and preparing for their futures. At a time when too many Americans fall short of their savings goals, that’s a positive sign.