Millennials are facing an unprecedented financial squeeze: 58% of them feel as if they must choose between homeownership and retirement security, according to an Advisor Authority study, powered by the Nationwide Retirement Institute.

The survey pointed out that as housing prices accelerate ahead of median income wage growth, millennials face a fundamentally different financial environment from their parents, resulting in their adopting different approaches to wealth building.

Millennials’ wealth-building approaches
Unlike prior generations, said Juan Jose Perez, president of Nationwide Corporate Solutions, millennials are struggling to build wealth through housing. Instead, they are turning toward contribution plans early in their retirement journeys.

“Half of millennial investors told us they have opened retirement accounts like 401(k)s or IRAs, and a quarter said they have opened brokerage accounts,” said Perez. “Additionally, 28% of millennials told us they plan to contribute more to their 401K or employer-sponsored defined contribution plan over the next year, with 23% saying they plan to contribute the maximum amount eligible for an employer match.”

Although they are navigating their prime earning years amid a volatile financial landscape, it’s great to see this generation tapping into the benefit of retirement accounts, Perez added. However, he pointed out, they can take that resourcefulness one step further by partnering with a trusted financial advisor who can help them build on those savings and prepare for major life events with confidence.

Home ownership seen as a challenge
The survey also noted that whereas previous generations used homeownership as a tool to build wealth, many millennials (investors ages 29-44) are struggling to afford housing and view it as a challenge to their retirement savings plan.

This struggle is creating a negative view of retirement attainability in general, the survey said. More than a third (35%) of millennials cited rising housing costs as the biggest obstacle to their retirement readiness, and 46% believe that mortgage or home equity loans pose the biggest threat to their achievement of a secure retirement.

In addition, the survey pointed out that the complexity of today’s financial landscape has driven many millennials to seek professional guidance at unprecedented levels. Of the 45% of Millennial investors who pay to work with an advisor or a financial professional, three-fourths (75%) of them began doing so in the last 12 months.

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