A recent survey Talker Research conducted for Life Happens , a nonprofit that educates people about life insurance and similar products, found that “Americans start to take their finances seriously around the age of 28.”
Brian Steiner, the executive director of Life Happens, told GOBankingRates in an email that he and his team don’t have “specific insights into why many think 28 is the age of adulting.” However, he explained, at 28, many Americans have experienced or start experiencing “big milestones like marriage, homeownership or starting a family — all of which may prompt serious financial planning that feels more ‘adultlike.'”
The survey also found generational differences in terms of when people got a credit card, started budgeting and opened a savings account. For instance, Steiner wrote the results revealed that, on average, millennials took those three steps by 25.
On the other hand, Gen X and baby boomers began budgeting and opening credit cards when they were around “27 and 28, respectively.” Both generations opened savings accounts when they were roughly 26. Additionally, Steiner noted that, aside from Gen Z, the results found other generations “began contributing to retirement or their 401(k) and purchasing life insurance later into their 20s and 30s.”
As for Gen Z? According to the study, that generation “is well ahead of the curve in terms of paying their own bills, getting a credit card, learning how to budget and opening a savings account (all around the age of 22).” But as far as making 401(k) or retirement contributions or purchasing life insurance, they’re behind. Per the survey, 53% “haven’t ever contributed to their 401(k) or retirement plan, and another 49% have yet to purchase life insurance.”
Steiner wrote that the discrepancy in Gen Z’s preparedness in those areas usually comes down to a lack of complete understanding of what specific terms mean. “The words 401(k), IRAs and life insurance can be daunting to many,” he noted.
Additionally, Steiner pointed to a 2023 study by his organization and LIMRA (the Life Insurance Marketing and Research Association) that found “a quarter of Gen Z and millennials say that not knowing how much or what kind of life insurance to buy stops them from getting coverage.”
Steiner emphasized the importance of Gen Zers looking into life insurance now versus further down the line.
“While Gen Zers may not think they need life insurance now, getting coverage in your 20s or 30s when you’re young and healthy is usually less expensive than when you’re older,” Steiner explained. “Life insurance can be quite affordable. For example, a healthy 30-year-old can get a $250,000 20-year-level term policy for around $16 a month. While paying the premium can feel like just another cost, you never know the course that life will take, so it’s important to remember that any amount of life insurance coverage is better than none at all, and it probably costs a lot less than you think.”
He also encouraged Gen Zers to use their employers’ retirement options, particularly contribution matches (if offered). “This is essentially free money, and you can still reap those benefits even if you only contribute a small amount,” Steiner noted. “Any contribution, no matter how small, is still a contribution!”
Steps Everyone Can Take To Get Closer To Reaching Financial Stability
The survey also revealed that 39% of Americans “feel that they are not currently financially stable. And while Americans are hoping that they’ll be stable by the age of 46, 41% of those respondents don’t believe that they’ll ever achieve financial stability.”
In terms of whether or not they can reach financial stability, the survey found generational differences. Merely 7% of Gen Zers “don’t believe that they’ll ever be financially stable.” However, “that number increases exponentially with each generation: 30% of millennials don’t believe they’ll ever be financially stable, along with 53% of Gen X and 66% of baby boomers.”
According to Steiner, there are steps everyone can take to get closer to reaching financial stability.
For one, you should open a savings account. “A little goes a long way when it comes to savings,” Steiner explained. “The sooner you open a savings account, the better — and as little as $10 a week will make a difference at the end of the year.”
Making a budget is also crucial. Steiner recommended examining your weekly and monthly spending, and then determining where you can spend less. “Bills, living expenses and savings should be a top priority in a budget, so once you identify those costs, you’ll know exactly how much you can spend on other items like coffee or eating out,” he noted.
You should also contribute to a 401(k) or retirement fund, Steiner wrote. “Whether it’s retirement offerings from an employer with a contribution match or your own personal retirement savings, prioritize investing in them,” he noted. “Retirement might be hard to picture for younger generations, but the earlier you start investing in your financial future, the better you will be down the line.”
Finally, Steiner stressed that you should buy life insurance or buy “more of it.”
“Life insurance is a crucial tool to ensure your loved ones are protected financially should the primary earner pass away,” Steiner explained. “Even for people without children or families, permanent life insurance policies can offer cash accumulation benefits in the future that can go towards a down payment on a house or car, for example, and so much more.”
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