Redefining the digital generation.
WORKING MILLENNIALS WHO ARE SAVING IN A 401(k) PLAN ARE CHALLENGING STEREOTYPES, OUTPACING EXPECTATIONS.
Our latest research, The Millennial Retirement Saving and Spending Study, reveals surprising data that indicate many working millennials who are saving in a 401(k) appear to be well positioned for long-term financial success. Contrary to widespread stereotypes that characterize them as "entitled" and "living for the moment," our study shows that working millennials are well-intentioned savers who are optimistic about reaching their financial goals.
Overall, this is good news. But while this group possesses a positive attitude about their current and future financial status, our research also indicates that they lack some of the knowledge needed to go it alone. According to our study, this segment of the millennial generation may rely on automated plan services to get them started—and nudge them along in the right direction—as well as advice and guidance to keep them on track.
Five key findings worth your attention
Working millennials are indeed saving for the future, but they also want and need direction to reach their goals. According to the study:
They are not just living for the moment
- Contribute 8% of pay on average (6% median), about the same as Gen X workers (8% average, 7% median)
- 79% say that they save money by cutting flexible expenses (entertainment, travel, and eating out), and 67% save by any means possible
- 74% say they are more comfortable with saving and investing extra money
Most see a bright financial future
- 78% are somewhat or very comfortable that they are on track to meet their financial goals
- 73% say they are better off financially than their parents at the same age
- 72% believe they will receive some Social Security benefits when they retire, but not as much as what today's retirees get
This group is engaged, not entitled
- 63% commit to purchasing only what is on their shopping list
- 68% say they shop by going to the store for preselected items that they research online
- 88% indicate that they are pretty good living within their means, and 82% are confident that their spending is well within the limits of what they can afford
They are open to advice and guidance
- 38% have already used some kind of advisor
- 11% have used a robo-advisor alone or in conjunction with a traditional advisor
- 84% plan to make managing their financial situation a higher priority this year
They embrace auto-services
- Of those who were auto-enrolled in their 401(k) plan, the average opt-out auto-enrollment deferral rate was 6%; however, 27% of respondents said they would not opt out of auto-enrollment until 10%
- 47% wish they had been enrolled at a higher rate; however, those auto-enrolled at rates below 3% are very sensitive to increases in the deferral rate
- 80% believe their employer should set the auto-enrollment default to take full advantage of the company match