When it comes to saving money, millennials tend to get a bad rap. But new data from saving and investing app Vimvest shows that younger Americans actually have some pretty respectable savings goals. Here's what millennials plan to sock away for various important objectives.
Social Security doesn't provide enough income to sustain seniors by itself, which is why workers need to build nest eggs independently. To this end, millennials are pretty grounded. They plan to save $438,538, on average, to fund their golden years. What sort of yearly income might that translate to? If we apply the 4% rule, that's $17,542 in annual income from savings. Seeing as how the average senior today collects $17,532 in Social Security, all told, that would translate into about $35,000 of annual retirement income -- not a ton of money, but enough to enjoy a modest lifestyle.
2. Buying a home
Millennials are seeking to save an average of $24,800 for a future home. Meanwhile, Zillow reports that the median home price in the U.S. is $227,700. That means younger Americans are aiming for roughly an 11% down payment. That's not terrible, but 20% is more ideal, as that's what's required to avoid private mortgage insurance, or PMI.
3. A reliable vehicle
Having a steady vehicle is, for many people, an important component of holding down a job. Millennials are saving $10,250, on average, toward an automobile purchase. In some cases, that could be enough to buy a decent used vehicle. And it pays to buy used in many cases, since new cars lose value the moment they're driven off the lot.
4. Student loan payoffs or future tuition
Americans collectively owe more than $1.5 trillion in student debt, and millennials are certainly no exception. It's not surprising, then, that younger Americans are aiming to accumulate $38,996 to either pay off existing student loans, or to cover the cost of future tuition (such as for graduate school) to avoid taking on additional debt.
5. Starting a family
Millennials are aiming to save an average of $4,625 to start a family. And that's smart, considering the costs involved in having a child. Not only must new parents grapple with expenses like healthcare, food, gear, and supplies, but to keep their jobs, they're often required to spend a small fortune on child care. In fact, as of last year, it cost $211, on average, to place an infant in full-time care at a day care center, according to Care.com. Many new parents aren't prepared to pay for child care, so it's smart to sock money away before having a baby.
Focus on savings
Clearly, millennials aren't just blowing their salaries on fancy coffee and avocado toast; they're also focused on meeting some pretty solid money-related goals. Socking funds away for the future is a good way to avoid struggling during retirement while saving for a sizable home or car down payment can make the ongoing monthly payments associated with both more manageable. And of course, it's wise to knock out student debt, avoid future educational debt, and put funds away in preparation for having a child. Those who aren't saving for these things should perhaps take a lesson from millennials -- and follow in their footsteps.