Millennials Delaying Milestones and Retirement Savings
Millennials delaying their decision to save for retirement continues to be a challenge for employers. The results of a new Ernst & Young study, cited by HR Dive, may explain some of the reasons why Millennials delaying milestones and major financial decisions confounds plan sponsors and financial professionals.
According to the EY study, Millennials delaying major life events, such as marriage, home ownership, new business ventures, and others is a major departure for previous generations. This is despite the fact that Millennials have entered the full-time workforce in greater numbers since 2016. Here are some key findings from the EY survey of 1,200 U.S. citizens between the ages of 20 and 36:
- 40% of Millennials own their own homes, compared to 45% of Gen Xers and Baby Boomers at a similar age
- 75% of Millennials worry that Social Security benefits won’t be available to them in retirement
- 70% worry about not having enough money in retirement
- 40% of Millennial women are mothers, compared to 57% of Gen X women at the same age
Millennials delaying decisions has earned them labels such as lazy and entitled. EY found the opposite to be true, as 86% of respondents said they believe hard work “is the key to getting ahead in life,” while more than a third say that remaining at or working one’s way up within, a single company “is the best way to advance your career.” Clearly, Millennials’ work ethic and loyalty trump their cliched slacker stereotype.
It’s important for employers to understand workers’ values and priorities so they can offer appropriate benefits, particularly for younger workers, HR Dive points out. Study after study has shown that Millennials delaying retirement savings has them under-saved for retirement. Some studies find that younger generations have no retirement savings at all. However, there are bright spots. According to Transamerica Center for Retirement Studies data, the median retirement savings for Millennials is around $31,000.
That said, financial stress runs high among the majority of Millennials. Many feel wildly burdened by debt — and contrary to popular belief, it isn’t all student loans. Northwestern Mutual’s 2018 Planning & Progress Study found that Millennials between the ages of 25 and 34 are saddled with an average of $42,000 in debt each, and the biggest source is actually credit card debt.
While the data may seem troubling, proactive employers can actually be a helpful resource for Millennials — something younger employees crave. HR Dive notes: “Employers can be a source of information and guidance for employees experiencing these problems, and research has shown that employees want and need their employer to provide financial education and assistance. Millennials are also career-focused, which makes development opportunities crucial in their process of choosing between employment offers.”
Nonetheless, proactive employers have responded to Millennials’ financial stressors by implementing innovative benefits like student loan repayment programs or emergency “sidecar savings” plans that enable younger employees to breathe easier, be more focused and productive at work, and boost retirement readiness by helping them save more for the future. Plugging into the mindset of Millennials delaying major life decisions and offering Millennials the benefits that meet their current needs seems like a big win for employers looking to attract young, capable and talented candidates.
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