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Research and Statistics

Millennials defer debt payoff, tap savings in pandemic

But even as COVID wreaks havoc on their finances, young adults are focused on paying off debt, a new study shows

Summary

In a new study, more than a third of millennials (35%) report that, due to COVID-19, they have spent some of their savings or have delayed adding to savings or paying off debt.

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With the coronavirus pandemic negatively hitting many millennials’ finances – whether it’s the generation’s twenty-something singles or those approaching 40 with children at home – paying down debt and saving for retirement are their top-of-mind financial priorities.

Financial priorities vary among younger and older millennials

According to a study by Georgetown University, almost 4 in 10 U.S. millennials (ages 24-39) reported that the pandemic has dealt them short-term negative financial impacts (38%), while 27% said they expect long-term impacts as well.

As a result, more than a third of millennials (35%) report that, due to COVID-19, they have spent some of their savings or have delayed adding to savings or paying off debt. Specifically, 23% of millennials with children say they have delayed or reduced payments to credit cards or loans, while 19% of millennials without children reported the same.

See related: Taking financial control amid a global pandemic

Still, paying off debt made the list of top three financial priorities in every millennial life stage segment, from young singles starting out to married couples raising children. It was especially favored among those age 24-29, where paying off debt was ranked in the top three by 44% of respondents.

Meanwhile, saving for retirement moved to the forefront for millennials age 30-39, ranked first, second or third by 47% of this group, while building an emergency fund and debt reduction were ranked in the top three by 44% and 43%, respectively.

The Georgetown survey was conducted in mid-July 2020 among 2,280 young adults, by the Business for Impact AgingWell Hub, part of the McDonough School of Business. The nationally representative results were released Nov. 17.

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