The economy needs the wealthy to spend a lot more to get back on its feet

reading park
The end of solitary leisure is near.

  • Solitary leisure – people doing activities alone – defined the pandemic economy.
  • It left a hole in the economy worth billions, and the wealthy are the only ones who can fill it now.
  • A post-pandemic world will likely see a return to social leisure and the experience economy.
  • See more stories on Insider’s business page.

The end of a lonely year is drawing near.

Bank accounts are freshly padded with $1,400 stimulus checks, any adult should be able to get a vaccine around May, and everyone is readying for a “hot vax summer.” Shut-in Americans are gearing up to spend and socialize after a year in which the experience economy was replaced by one defined by solitary leisure.

In a year marked by social distancing, activities enjoyed alone such as golfing and boating replaced the group activities typical of social leisure, like amusement parks and tourist attractions. At the end of last August, Google Mobility data showed that restaurants, theme parks, museums, and the like were down 77% from pre-pandemic levels, and visits to parks, beaches, and marinas were up 51%.

Spending on experiences in 2020 declined by 29% compared to 2019, per a February Bank of America Research note. Spending on leisure fell by 17% and spending on “stuff” was down by 6%. Spending on solitary leisure categories such as golf and bikes remained strong in mid-March, per a subsequent BofA note.

But the anticipated economic boom of 2021 that should follow a mass vaccine rollout signals that the US will soon say goodbye to solitary leisure. A full economic recovery depends on something else, though: how the wealthy will spend their money.

The wealthy need to spend

The drop in spending left a huge hole in the economy that spending on solitary leisure alone couldn’t fill.

That’s because the experience-based economy, which thrives on activities like sporting events and travel, only continues to grow as long as people have discretionary money, Daniel Yoder, the department chair of the Recreation, Park, and Tourism Administration at Western Illinois University, previously told Insider. But discretionary spending all but disappeared.

Now, Americans are sitting on $1.6 trillion in savings. BofA Research estimates that to hit $2 trillion by the time the economy reopens. The economic fate of the US, it said, depends on whether Americans view their excess savings as wealth or deferred income.

biker
Solitary leisure created a hole in the economy that the wealthy need to fill.

Much of that is in the hands of higher-income households, who have more of a propensity to spend. Consumer spending accounts for 70% of the American economy, and half of that is from the top 10% of American households, per estimates from Goldman Sachs and Deutsche Bank, respectively. That means about one-third of US GDP comes from spending by the top 10%.

That all means it’s up to the wealthy to fill the gap from the solitary leisure era. “Higher income households are key to driving the recovery in consumption,” reads a recent UBS note led by strategist Keith Parker, which noted that more than half (52%) of Americans expect to increase their spending once life returns to “normal.” Those earning more than $80,000 annually anticipate increasing their spending the most – a more than 8% increase, compared to 5.2% for middle-income earners and 3.4% for those earning less than $30,000.

During the pandemic, spending among high earners was consistently 10% below pre-pandemic levels, compared to 5% below for middle-income earners. But spending less doesn’t mean they stopped spending entirely.

Instead of splurging on pricey gym memberships and educational trips as forms of discreet wealth, they began shelling out on nostalgia-tinged purchases from childhood collectibles to vintage fashion to rare books and art, from street art to cryptoart. Critics charged that the pandemic economy created various strange asset bubbles, but the common theme of people with money buying stuff online while bored at home was consistent throughout the year.

But that all might soon look a lot different.

A return to social leisure

As the economy continues to reopen amid the vaccine rollout, it increasingly looks like America will see the return of social leisure.

Restrictions are already lifting in states that had longer-lasting constraints, creating more opportunities to socialize and partake in experiences. Consider the restart of group fitness classes in New York City this week for the first time in a year and will resume limited live performances next month.

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2021 should see the experience economy bounce back.

There are also signs that travel is on the verge of a booming comeback as Americans itch with wanderlust. Airports saw their busiest time the weekend of March 12 since the pandemic began, and airline, hotel, and restaurant spending are all up this month compared to a year ago, although still not close to pre-pandemic times.

And, after a year of loneliness, Americans are ready for intimacy. Dating apps saw record-breaking use during the pandemic, and it looks like that won’t be abating any time soon. Several people told Insider’s Julia Naftulin that they’re looking forward to relentless dating and relieving pent-up horniness in a vaccinated world.

More in-person dates are certainly set to fuel the rebirth of the experience economy, inciting a shift from Facetime and socially distanced walks to nights at movie theaters and cocktail bars.

The caveat is that President Biden has been eyeing a tax increase on Americans making over $400,000. They could see their top income-tax rate increase to 39%, which could curb their desire to spend. So too, could the unpredictability of inflation as goods begin to get more expensive along with reopening.

The light at the end of the tunnel for a new “new” normal is within sight, but the wallets of the wealthy will determine just how bright it gets.

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Americans have saved $1.6 trillion since the pandemic began. 3 shocking facts show how big that is.

americans spending
With $1.6 trillion in savings, Americans are set to spend.

Americans are ready for a shopping spree.

Coronavirus lockdowns and two stimulus packages left American consumers sitting on approximately $1.6 trillion of pent-up spending, according to Commerce Dept. figures released on Friday.

As the pandemic shut down the experience economy, Americans shifted away from social leisure – recreational time spent in groups – and toward activities enjoyed alone. Now, 11 months later, spending on this kind of solitary leisure hasn’t been enough to bring the economy back to its 2019 levels, let alone beyond. The many Americans who weren’t hit by job loss or pay cuts have built a fatter savings cushion than they would have otherwise.

Three striking data points put the American consumer’s $1.6 trillion in dry powder into perspective.

(1) Americans account for half of global savings during the pandemic

Worldwide, consumers saved an extra $2.9 trillion globally during the pandemic, per Bloomberg Economics estimates.

That means Americans’ $1.6 trillion in savings accounts for slightly more than half of the global number, followed by China, Japan, and major European nations like Spain and the UK.

Bloomberg expects these savings to continue to grow as restrictions continue and governments implement more stimulus, notably President Joe Biden’s $1.9 trillion relief package. But as the vaccine rollout picks up speed, more spending may happen sooner rather than later.

(2) American savings are equivalent to South Korea’s GDP

The amount of spending money Americans are currently sitting on is the equivalent of another major industrialized country’s economy. As of 2019, South Korea’s GDP, or annual output, was $1.6 trillion.

For context, America’s GDP is $21.5 trillion.

Experts are currently projecting 4.6% growth for US GDP this year, per Bloomberg. If Americans spend all the money they saved in the past year, that could jump to 9%; whereas if they don’t, the GDP forecast could drop to 2.2%.

(3) Americans saved more than the decline in spending

Experts continue to debate how big a hole the coronavirus left in the economy. Biden, Wall Street, and the Federal Reserve see a larger hole, while the Congressional Budget Office (CBO) and moderates see a smaller one, Insider’s Ben Winck reported.

According to the Congressional Budget Office, the potential total output of the US economy as of the fourth quarter of 2020 was about $22.15 trillion. But the Bureau of Economic Analysis’ estimate for GDP that quarter was just $21.49 trillion, suggesting an output gap of around $660 billion.

Americans’ $1.6 trillion in savings is therefore roughly $1 trillion bigger than the output gap. That means consumers won’t need to collectively spend the entirety of their pandemic savings to close the output gap.

While the full $1.6 trillion is unlikely to be spent, the changes seem good that the output gap will be more than filled when the economy eventually reopens. In fact, it could be more spending than the US economy has seen in some time, given the historically weak recovery from the Great Recession of 2008.

It’s why so many economists are predicting that lockdown lifting will see the biggest boomtime in a generation, potentially ushering in a new era in the US economy.

Read the original article on Business Insider

The elite’s favorite status symbols have become way more expensive over the past 20 years

wealthy person
The elite have turned towards investing in education and health as a means to flaunt their riches.

Showing off wealth is no longer the way to signify having wealth.

Flashing a Louis Vuitton handbag or a multimillion-dollar Bugatti have long been standard status symbols for the elite, but the ultrawealthy have increasingly turned to intangible investments such as security and health to discreetly flaunt their wealth instead. An unlikely reflection of this transformation is the recent history of inflation in the US economy.

Consider American Enterprise Institute’s famous inflation chart, which was once dubbed by Bloomberg as “The Chart of the Century” and has made the rounds on various media platforms throughout the years.

The latest iteration, featured below, shows 54.6% overall inflation over the last 21 years, which works out to an annualized compound growth rate of 2.2%, very close to the Federal Reserve’s stated inflation target.

But as you can see, some services and goods have become way more expensive than others.

AEI
Services have grown more likely to become more expensive over time than material goods.

 

Hospital services, college tuition, medical services, and housing have seen disproportionate upticks past the average 54.6% inflation. Their costs have outpaced the hike in average hourly wages, which have shot up by 82.5%, or 28% more than the average increase in consumer prices.

Meanwhile, consumer goods such as new cars, clothing, computer software, toys, and TVs have become more affordable.

In a nutshell, it seems that the cost of intangible services (with the notable exception of housing) has increased while the cost of material goods has decreased, mirroring the shift from conspicuous to inconspicuous consumption.

The rise of discreet wealth

Inconspicuous consumption is a growing trend among not only millionaires and billionaires, but “the aspirational class.”

Elizabeth Currid-Halkett coined the term in her 2017 book, “The Sum of Small Things: A Theory of the Aspirational Class,” as the opposite of “conspicuous consumption,” a term conceived by 19th-century economist Thorstein Veblen referring to the concept of using material items to signify social status.

In the US in particular, the top 1% have been spending less on material goods since 2007, Currid-Halkett wrote, citing data from the US Consumer Expenditure Survey. In an era where mass consumption means both the upper class and the middle class can own the same luxury brand, she explains, forgoing material goods for immaterial means is a way for the rich to differentiate themselves.

“This new elite cements its status through prizing knowledge and building cultural capital, not to mention the spending habits that go with it,” Currid-Halkett wrote, adding, “Eschewing an overt materialism, the rich are investing significantly more in education, retirement, and health – all of which are immaterial, yet cost many times more than any handbag a middle-income consumer might buy.”

That inconspicuous consumption often goes unnoticed by the middle class – but getting noticed by a fellow elite is the appeal of the discreet. Investing in things like education, health, and childcare – which have all become more expensive since 2000, per the AEI chart – “reproduces privilege” and “offers social mobility” in a way that flaunting luxury couldn’t, according to Currid-Halkett.

Discreet wealth is just one of many inflation factors

Now, this isn’t to say that discreet wealth is the sole cause of inflation in the US.

Mark Perry, the AEI economist behind the chart, notes in his blog post that economists have attributed several reasons to these trends: Price increases correlate with a greater degree of government involvement in a good or service (like health care) and prices decrease as the degree of international competition for goods increases (like toys).

Mass production has enabled manufactured goods to become more affordable. And college has become more expensive for many reasons, including increasing globalization, increases in financial aid, and ballooning student services.

But the fact that the inflation chart correlates with the rise in discreet wealth indicates the power of demand in driving up prices – and the spending power of the elite as wealth inequality worsens in developed economies.

The more the elite covet sending their kids to high-end preschools and Ivy League colleges, or spending millions to live within walking distance of the country’s best public elementary and secondary schools, or buying their kids boutique healthcare as a way to signify status, the more expensive those industries are going to become.

Call it discreet inflation. 

Read the original article on Business Insider

Millennials led the 2020 housing boom, but it wasn’t enough to catch up to boomers

real estate agent
Millennials have finally started buying homes, but they’re still way behind other generations.

Despite fueling 2020’s boom in the housing market, millennial homeowners are still lagging behind.

More millennials bought homes last year than any other generation, according to Apartment List’s Homeownership report, as the pandemic accelerated a five-year trend in which millennial homeownership rates rose the fastest as the generation aged into the career advancement and prime homebuying stage of their 30s.

The influx of millennial homebuyers was goosed by families fleeing big cities for the suburbs and historically low interest rates, making buying easier for those with enough money saved for a down payment. Finally, homeownership had become more attainable for a generation famously behind in homebuying compared to previous generations.

But the surge isn’t enough for millennials to close the homeownership gap. 

Less than half (42%) of millennials are homeowners, per the report, compared to 48% of Gen Xers and 51% of baby boomers when they were the same age. While first-time home purchases increased from 31% to 33% in the past three years, the report said, the uptick doesn’t come close to the 50%-plus first-time buys during the pre-Great Recession “homeownership boom.”

The pandemic will likely continue to exacerbate this generational chasm, the report states, partly because it’s caused some millennials to delay homeownership or give up on homeownership entirely.

(The report looked at data from the US Census Bureau and the annual Apartment List Renter Survey, which polled 1,851 millennials.)

The millennial wealth gap makes it harder to close the generational wealth gap

Twenty-one percent of millennial survey respondents said the pandemic caused them to postpone buying a home. Of this cohort, 67% cited income loss and 21% said they had to dip into their down payment savings. And 18% of respondents plan to rent forever, with 74% of them citing affordability as the key reason. 

For over a decade, millennials have been shouldering student-loan debtsoaring living costs, and two recessions before the age of 40. This affordability crisis has made it difficult to save for a down payment, and it hasn’t helped that the demand for homes in 2020 has driven housing prices up.

The stark divide among millennials who find homeownership attainable and the peers who find it unattainable reflects the millennial wealth gap, in which one cohort of millennials is faring well and the other is struggling. As the pandemic intensifies this intragenerational gap, it’s become even harder for millennials to close the wealth divide that exists outside their generation.

That would be the vast generational wealth gap between millennials and boomers. Millennials hold four times less US wealth than boomers held at their age, per Fed data, and earn 20% less than boomers did, a report by think tank New America found.

It explains why fewer millennials own homes than their parents did at their age, and why, despite the millennial housing boom of 2020, the generation is still wrestling to make up for lost ground. 

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December’s $600 stimulus boosted spending by 30% – and Biden’s new plan calls for checks twice as large

Joe Biden
Joe Biden plans to implement a $1.9 trillion stimulus package.

  • President-elect Joe Biden’s $1.9 trillion stimulus package includes a $1,400 top-up for stimulus checks, bringing the total distributed amount from December to $2,000.
  • These kinds of direct payments are intended to encourage consumers to spend, stimulating the economy.
  • BofA Research found those who received $600 checks in the last stimulus spent 30% more than those who didn’t, and as a result upgraded its forecast for GDP growth to 4% in the first quarter, from 1% previously.
  • The stimulus is the first step in Biden’s attempt to fix America’s K-shaped recovery, in which the wealthy are doing fine and the rest are struggling.
  • Visit Business Insider’s homepage for more stories.

President-elect Joe Biden introduced his plan for a $1.9 trillion stimulus package on Thursday. Called “The American Rescue Plan,” the package would provide another infusion of federal aid to stimulate the economy as the pandemic continues to sweep the nation.

That includes a $1,400 top-up for stimulus checks, bringing the total distributed amount from December to $2,000. It’s set to make a big difference in consumer spending.

The $900 billion stimulus which passed at the end of 2020, lambasted in some corners for not being hefty enough, has already helped stimulate the economy. Those who received $600 stimulus checks as part of December’s package saw a 20% year-over-year increase in spending since January 1, according to a recent Bank of America Research report which cited proprietary bank data on consumer spending. They also spent 30% more on their cards compared to those who didn’t receive a check.

Citing the increased spending, BofA forecast GDP growth of 4% (up from 1%) in the first three months of 2020, before slowing to 5% the following three months (down from a previous projection of 7%). The bank expects overall GDP growth of 5% in 2021, up from the prior 4.6% forecast. (BofA could further revise its forecast once the $1.9 trillion package passes.)

BofA gdp growth 2021
Chart via BofA Research.

Now that Americans will have even more extra money in their pockets, it’s likely that spending will continue to rise among those who receive stimulus checks, continuing to prop up the economy.

$1,400 checks are intended to help America’s K-shaped recovery

BofA’s economic growth forecast indicates that Biden’s near $2 trillion package could be a promising tool as America’s K-shaped recovery continues to intensify. Those at the top are seeing jobs recover and their wealth grow while the bottom of the K struggles to pay bills

It’s partly because the tools to used to save America’s economy so far have mostly helped wealthy Americans. In March, Federal Reserve Chairman Jerome Powell implemented a policy known as quantitative easing, in which the central bank did the rough equivalent of “printing money” by adding credit to its bank accounts, buying its own debt and thus increasing the supply of money in the economy. He also kept interest rates low to encourage spending.

These two drivers helped stocks recover, incentivizing the wealthy to pump money into the stock market as they sought a sizeable return. Relatedly, America’s household wealth hit a record high of $123.52 trillion in the third quarter. 

But most Americans don’t own stocks, and that’s where stimulus is supposed to come in. After the $2.2 trillion stimulus package passed in March, US savings rates soared to an all-time high of 33% in April. When that package expired in July, Americans were left waiting out eight months of political gridlock before a second package was passed, with individuals falling into poverty and many small businesses closing their doors. Meanwhile, the Fed’s quantitative easing continued uninterrupted, and the stock market finished the year on a record high

Powell has repeatedly advocated for more stimulus spending, and Joe Biden’s $1.9 trillion stimulus package looks like a clear response. If it passes, it may make Bank of America’s 5% annual GDP growth forecast look tame.

Read the original article on Business Insider

Are Texas and Florida the new California and New York?

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Elon Musk is the latest high-profile tech figure to relocate from California to Texas.

  • Texas and Florida are challenging California and New York, respectively, but will they replace them?
  • Tech elites from Silicon Valley have been flocking to Texas, mirroring Big Apple financiers on the east coast fleeing to Florida.
  • They’re all seeking warm weather, affordability, and low taxes as they leave behind a higher cost of living.
  • Texas and Florida may never truly displace California and New York, but the rivalry is real, positioning the southern states as true power players.
  • Visit Business Insider’s homepage for more stories.

Sunnier locales, lower taxes, and a more affordable cost of living. California’s tech elite and New York’s financiers are in pursuit of all three, and they’ve found that trifecta in Texas and Florida.

Out west, there’s a Silicon Valley exodus to Texas, headlined by Elon Musk’s and Oracle’s moves to the Lone Star State. And on the east coast, there’s the Wall Street exodus to Florida, marked by the relocation of Charles Schwab himself and reports of Goldman Sachs shifting some of its operations to the Sunshine State.

The pandemic-era rise of remote work has spurred companies and the individuals who work at them to reevaluate their locations and the lifestyle that comes with them.

The migration that has ensued is transforming the no-state income tax lands of Texas and Florida into the California and New York equivalents of 2020, but really only for the time being.

Silicon Valley is headed to Texas

San Francisco’s increasingly high costs, safety, and political climate are pushing some tech elites out of San Francisco, Business Insider’s Meghan Morris and Berber Jin reported

And it’s not just the bigwigs reconsidering their lifestyle. More than a third of Bay Area tech workers said in a recent survey they’d consider leaving if they could permanently work remotely. 

While Silicon Valley’s fleeing residents have scattered everywhere from Miami to Denver, most have flocked to Texas. Austin, long the center of Texas’ tech scene, has been a hot spot in particular. Dropbox CEO Drew Houston and Opendoor cofounder JD Ross are moving to the city, while companies are also relocating there, including software giant Oracle and the investment firm for venture capitalist and Palantir cofounder Joe Lonsdale.

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Oracle cofounder Larry Ellison is moving Oracle’s headquarters to Austin, Texas.

Tesla also has a Cybertruck factory under construction in the area. Its founder and SpaceX CEO Elon Musk is the latest high-profile tech figure to announce a move to Texas, but it’s unclear where in the state he’s moving. 

Even Houston has been attracting tech talent, with Hewlett Packard Enterprises relocating its headquarters there from San Jose.

“There are lots of people that have already moved that haven’t been written about that are pretty high profile,” venture capitalist Keith Rabois, who headed to Miami instead of Texas, told Morris and Jin. He declined to name who else left. “Post-COVID, I think the concentration of talent has atrophied, perhaps permanently.”

He said that pre-pandemic, San Francisco’s spot at the top of the tech hierarchy outweighed his dislike for the city, but remote work has scrambled that hierarchy. 

Wall Street is flocking to Florida

While California’s tech elite are packing up their bags for the Lone Star state, New York’s financiers are trading in skyscrapers for sunshine in Florida.

Hedge fund Elliott Management is moving its headquarters to West Palm Beach. Its co-chief investment officer, Jon Pollock, has reportedly been living in his West Palm Beach home during the pandemic. Charles Schwab, founder of the eponymous brokerage and asset management giant, also relocated to Palm Beach this year, voting registration records show.

Blackstone, the world’s largest private-equity firm, headquartered on Park Avenue in Manhattan, is opening an office in Miami with plans to bring as many as 215 technology-focused jobs there. More recently, Goldman Sachs has been considering plans to shift asset management operations out of New York, Bloomberg first reported.

West Palm Beach, FL
Big Apple financiers are heading to spots in South Florida, such as West Palm Beach.

Business Insider recently spoke with 13 finance and real estate professionals about Florida’s ascendant appeal amid the pandemic, many of whom described an uptick in bigger and longer office-space leases by out-of-state firms and high-end real estate inventory running low as Big Apple financiers flood the area.

Stephen Rutchik, Colliers’ executive managing director of office services for the South Florida region, had told Business Insider during these talks that low taxes, warmer weather, and a low-key vibe had lured financial services firms in recent years.

But interest really popped off in July, he said, when the industry had become more comfortable with remote work. Rutchik said his team is seeing unprecedented interest, with the call volume from prospective tenants increasing “overnight” to “torrential” levels.

“We’re touring hedge funds on our agency side one to three times a day,” he added.

CA and NY are still top, but TX and FL are officially in the game

While Texas and Florida are enjoying the limelight as the new hotspots, experts say they won’t come to dominate New York’s Wall Street and California’s Silicon Valley.

Jonathan Woloshin, head of real estate and financials research at UBS, acknowledged to Business Insider that Texas and Florida have been and will continue to be the beneficiaries of further population, job, and business growth, and job inflow will contain a greater percentage of “front line” work as opposed to back office-related functions. But they aren’t necessarily the “new” California and New York, he added. 

Ron Conway, the founder of SV Angels who’s been called “the godfather of Silicon Valley,” recently told Business Insider this isn’t the end for Northern California’s dominance.

“The Bay Area’s challenges can be frustrating, to be sure, but there’s still no place on earth like the Silicon Valley and the San Francisco Bay Area when it comes to talent, access to capital, and the tech ecosystem for startups that have created so many successful companies and founders,” he said. 

Wall Street, New York
Wall Street won’t lose its grip in the long run, experts say.

Regarding Florida, several experts Business Insider previously spoke with highlighted a few challenges that could ensure the real Wall Street hangs on to its core position: a tighter labor market, expensive relocation costs, and a shortage of available luxury homes, to name a few.

Across the pond, similar fears that London would lose its luster after the Brexit vote have (so far) proved unfounded. Despite UK fund managers predicting 16% of Britain’s asset management jobs would relocate, a Financial Times survey found the majority of international banks and asset managers have actually increased their number of London employees since 2015.

California and New York may remain unparalleled in the long run, but Texas and Florida’s elevated status as the current main attractions could give the former two a run for their money.

Woloshin said that as more individual wealth becomes concentrated in Florida and Texas, it’s likely that more venture-like and private equity fund-raising and investing could occur in both states.

“New York and California are likely to remain strong business destinations given their attractiveness to the talent pool,” he said. “However, going forward, they will not be the only game in town in terms of high-quality job and wealth creation.”

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One silver lining of the pandemic: Millennials are saving more

millennial saving
The pandemic has helped some millennials boost their retirement savings.

Millennials are finally saving.

It seems the pandemic has helped some millennials sock away some money for retirement. Wells Fargo’s 2020 Annual Retirement Study, which surveyed 4,500-plus Americans ages 18 to 76, found that the pandemic left boomers and retirees more financially exposed and millennials saving more.

In fact, 18% of millennials have increased their retirement savings since the pandemic began, according to the study. It also revealed that 29% of millennials began saving for retirement at a younger age (25) than Gen X and boomers did, at ages 30 and 36, respectively. 

But that’s not the case for all millennials – 39% of millennial workers said in the survey they don’t know if they can save enough money for retirement because of the pandemic’s economic impact.

The generation has been notorious for its lack of wealth, blamed primarily on the Great Recession and its aftermath, the US’ crippling $1.6 trillion student debt burden, and a skyrocketing cost of living.

Such financial roadblocks have all made it difficult for some millennials to save. “Older millennials are often realizing they’re going to have to play catch-up with their finances if they want to ever be able to retire, but some of them have already decided that they likely will not ever be able to afford to retire,” Jason Dorsey, a consultant, researcher of millennials, and president of the Center for Generational Kinetics, previously told Business Insider.

It’s likely those who have been able to boost their retirement savings weren’t part of the millennial cohort who received pay cuts or found themselves unemployed during the pandemic. But it’s not just millennials – saving is up across the board as the US household net worth hit a record in the third quarter, up 3.2% from the second quarter. With many businesses shut down when the pandemic first hit the US in the spring, people began spending less, leaving more money to save. Having federal student loan payments paused until December 31 also likely made it easier for younger generations to stash money away.

But saving for retirement isn’t the only way the pandemic has helped some millennials financially prepare for their future. A 2020 Northwestern Mutual study that polled 2,700 Americans found that slightly over a quarter of millennials are readjusting their financial plans, more than any other generation, and that one-fifth of millennials are now creating a financial plan.

And when asked what age respondents expected to retire, millennials cited the earliest target date of all generations: 61. 

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