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Millennials face savings time bomb

People in the millennial generation are known for their tech-savvy, social media-loving traits, but there's another aspect to the group that's not so attractive: a negative savings rate.

Even though the economy is recovering from the recession, workers under the age of 35 have swung into dangerous territory with a savings rate of negative 2 percent, The Wall Street Journal reports, citing an estimate from Moody's Analytics. By comparison, Americans age 35 to 44 have a savings rate of about 3 percent, while people between 45 to 54 are saving six percent of their income.

While younger workers often struggle to sock away money as they established their careers, the under-35 crowd wasn't always such poor savers, with Moody's finding that the savings rate for the age group was 5.2 percent in 2009. So what's driving that about-face? For some millennials, the burden of student loans and a weak job market have thrown up challenges to saving, while others admit to spending their income on travel or other expenses, The Journal found.

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The bad news for millennials -- and the U.S. economy -- is how that negative savings rate could play out. Without a cushion of savings, those under 35 years old will have a tougher time achieving the American Dream, such as securing a down payment for a house or a new car. On top of that, millennials could also be more at risk for financial troubles if there's another economic downturn.

Student debt has had a huge impact on the economic stability of younger Americans, according to a Pew Research Center study published earlier this year. About four out of 10 U.S. households that are headed by an adult younger than 40 have some student debt, the country's highest share ever.

On top of that, college-educated adults without student debt have an average net worth of $64,700. By comparison, college-educated adults who are paying off school loans have only one-fifth that amount, at $8,700.

Millennials are struggling with a tougher employment outlook than older generations. Workers 25- to 34-years-old have an unemployment rate of 10.5 percent in October, or more than double the 4.4 percent rate for Americans between 35 to 44, according to the Bureau of Labor Statistics.

Behavioral differences between generations may also be coming into play. For instance, millennials spend about 15 hours a month on social media, more than twice the seven hours a month they spend on reviewing or researching investments. They also spend seven hours a month on researching new gadgets to buy, while Gen Xers and Baby Boomers spend only four and two hours on researching new tech purchases, respectively, according to a survey last month by asset management firm BlackRock.

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