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Past financial crises have made millennials 'more cautious, more proactive' in how they manage money, survey finds

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Living through multiple financial crises and recessions has impacted the way millennials are now managing their money.

The experience has given members of that generation some confidence that they'll be able to make it through another recession if the U.S. falls into one amid high inflation and global uncertainty.

Fifty-six percent of millennials feel confident in their ability to protect their finances if there is another downturn, according to the May Advisor Authority survey from Nationwide Retirement Institute. The survey of 839 adults with more than $100,000 in investable assets was conducted online July 22-Aug. 17, 2021.

Other generations were not as sure that they'd be able to weather another financial storm – only 43% of Generation X and 33% of baby boomers said the same.

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"I want to use the word resilient when it comes to these millennials, because those prior financial crises have really made them more cautious, more proactive and confident in how they're changing their saving and investing habits," said Kristi Martin Rodriguez, leader of the Nationwide Retirement Institute.

Millennials, who currently fall between the ages of 26 and 41, were teens or young adults during the Great Financial Crisis in 2007-2008, and were hit again by the pandemic recession in 2020.

"They're applying what they've really gotten out of those two financial crises, and really adopting these healthy habits," Rodriguez added.

Developing good habits to protect themselves

Some of the best habits that millennials have picked up are around retirement planning and being extremely prepared for the future, the survey found.

Most of the millennials surveyed feel good about their retirement savings and are even prepared in the event of a market meltdown as has been seen lately – 83% have a strategy in place to protect against market risk, an 11-point increase from 2020.

In addition, 85% of millennials expressed interest in annuities for retirement planning, which would also help protect them from volatile markets later in life. That was a 13-percentage point increase from a year earlier.

"You can really see them leaning into wanting to have some type of guaranteed income and protect themselves," said Rodriguez.

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Millennials are planning for the next recession

To be sure, millennials have the most confidence but are also more concerned about a recession than their older counterparts. Nearly 80% of millennials are concerned about an upcoming U.S. economic recession, compared to 71% of Gen X respondents and 63% of boomers, the survey found.

And the last recession was difficult for some millennials – about one-third had to liquidate assets from a retirement plan to make ends meet, the survey found.

Still, that worry is being channeled into action. Millennials are working on establishing budgets, building up emergency savings and working with a financial advisor to shore up their finances amid today's uncertainty, according to the report.

In addition, millennials are feeling more optimistic about the financial outlook over the next 12 months. More than half are feeling good about the future, up from 38% in the last survey.

"There's definitely concern about an impending recession, but they also feel very confident in their ability to navigate it," said Rodriguez.

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