Climate change is reshaping how Millennials approach retirement planning according to a University of Arizona (UA) study.
This generation is the first to navigate retirement savings in the face of the climate crisis and they are divided on decisions about investing, buying a home, or traveling.
Marissa Hettinger, a doctoral student studying human development and family science in the Norton School of Human Ecology, was interested in looking at how the psychological stress of climate change could influence Millennials’ decision-making.
“There’s a lot of news and research that says that Millennials are not as financially prepared as generations before us in ways such as buying a house and building savings, starting a family and then of course, retirement,” Hettinger said.
Her research dug deeper into this narrative and looked at how Millennials compare to the generations that came before them.
“Because not only do we have to think about saving for the future, but what the future will look like in 50 years,” Hettinger said.
Using an “imagined future” approach, Hettinger, worked with Sabrina Helm, associate professor of retailing and consumer science, and Kealie Walker, a fellow graduate student studying human development and family science.
The team interviewed 50 participants, aged 26 to 41.
Their research showed that many Millennials are concerned about displacement and location.
For example, in places like Arizona, water security is an increasing worry.
Meanwhile, those who live in coastal areas, face concerns over rising insurance costs due to extreme weather events like flooding and hurricanes.
“For a lot of Americans, our house is our nest egg, being a homeowner, that’s kind of where you really put your money and you depend on that,” Hettinger said.
For retiring Americans, this investment has traditionally provided financial stability.
However, some Millennials are reconsidering homeownership entirely and are exploring alternative ways to build wealth such as focusing on retirement savings while renting or sustainable investments that align with environmental, social, and governance (ESG) principles.
“There was some of that doom and gloom, people who couldn’t necessarily afford it and then it kind of puts them in that ‘here and now’ mindset like, ‘Well it’s not going to be there in the future, so I’m going to travel now while I can and not save that money,” Hettinger said.
At the same time, travel might not even be an option for their generation.
“Our parents and our grandparents in their retirement days, they might have been able to travel and kind of explore and use that money but we might not be able to,” Hettinger said.
The study’s findings were split: about half of Millennials imagined a future of doom and gloom while the other half viewed climate change as a motivator to save more money for the future.
“Putting away that money so that they have a financial safeguard,” Hettinger said.
Among those individuals who were experiencing climate-related stress, did however have proactive hope tied to advancements in technology, innovation, and government intervention.
Hettinger hopes that these insights will inform employers and financial advisors to offer more green technology investments and support individuals in building resilience so that they might find more hope in the future.
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