Retirement Perspectives: The Millenials

 Millennials (born 1979 to 2000) are the youngest and largest generation in the workforce. They are also a do-it-yourself generation of retirement savers. Millennial workers most frequently cite self-funded savings (55 percent) as their expected primary source of retirement income, including 43 percent expecting to rely on income from 401(k)s, 403(b)s, and IRAs and 12 percent from other savings and investments. Just 17 percent are expecting Social Security to be their primary source of income when they retire.

Millennials have heard the word that they need to save for retirement. Seventy-two percent of Millennial workers have started saving –and at the young age of 22 (median). Among those who are offered a 401(k) or similar plan, 72 percent participate in the plan and contribute seven percent (median) of their annual pay. An impressive 30 percent contribute more than 10 percent of annual pay. The total household retirement savings among Millennials is $31,000 (estimated median).

Millennials can do more to improve their retirement outlook by learning about investing. Seventy-two percent agree that they do not know as much as they should about retirement investing. Among those currently participating in a 401(k) or similar plan, one in four are “not sure” how their retirement savings are invested. Another 22 percent indicate their retirement savings are invested mostly in bonds, money market funds, cash, and other stable investments, thereby suggesting that they may be investing too conservatively given their long-term investing horizon until retirement.

Hungry for more education, most Millennials (75 percent) say they would like more information and advice from their employers on how to achieve their retirement goals. Of the three generations, Millennials are most likely to find digital technologies offered by their retirement plan providers to be helpful, including 80 percent who find mobile apps for managing their accounts to be helpful (compared to just 48 percent of Baby Boomers).

Surprisingly, Millennials have also made retirement a topic of conversation. The survey found that 22 percent of Millennial workers frequently discuss saving, investing, and planning for retirement with family and friends, which is more than twice as many as Generation X and Baby Boomer workers (both 10 percent).

Millennials are doing a great job saving for retirement. By learning about investments and through careful planning, many maybe well-positioned to achieve a comfortable retirement.