According to research from EBRI, amplified by a Fidelity report, people are more prepared for retirement especially Millennials who seem to be getting the message that they need to save for retirement. In fact, account balances doubled for younger workers with one to four years of tenure from January 1, 2014 to March 1, 2016.
Gains in account balance according to EBRI over the more than two-year period for workers with one to four years of tenure by age group included:
- Age 25-34: 80.5%
- Age 35-44: 59.3%
- Age 45-54: 46.4%
- Age 55-64: 39.0%
The Fidelity research comparing households’ ability to cover essential expenses in retirement from 2013 to 2015 was equally encouraging. In 2015, 45% of households were likely to be able to pay for the basics up from 38% in 2013 with just 32% needing to make adjustments last year compared to 43% in 2013. Savings rates increased 16% overall to 8.5% with Millennials increasing savings by almost 30% over a two-year period.
Though there is a lot of concern about the retirement readiness of US workers it seems that workplace retirement plans are effective with 15 times more people likely to save through a payroll deducted retirement plan than on their own fueling state initiatives to increase access to retirement plans at work. The EBRI and Fidelity research shows that people are getting the message led by plan sponsors who, through a combination of enlightened plan design, use of experienced plan advisors and employing financial wellness programs, are making a big difference. Though there is a lot of skepticism about younger workers, they seem to be getting the message more than any other age group perhaps realizing that their chances to participate in a DB plan are remote with most not believing that Social Security will be around when they retire.
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