Younger workers are in favor of the do-it-for-me approach. According to a study from the American Savings Education Council (a program of the Employee Benefits Research Institute), most of the younger generations (ages 19 to 39) favor employers taking a more active role in savings. Gen Xers (in this study, born between 1968 and 1979) are stronger supporters than Gen Yers (49% of those in Gen X think autoenrollment is a very good idea, compared with 40% of Gen Yers).
Advisers should be aware that a significant minority of Gen X and Y are pretty clueless about retirement savings. For instance, 13% overall (19% of Gen Yers) are not sure whether they are covered by a traditional pension plan. On the defined contribution side, 10% overall (17% of Gen Yers) do not know whether or not they are eligible for their company’s 401(k) or 403(b) plan, according to the study.
While the study shows that many in Gen X and Y have started thinking about retirement (almost half have at 42%), it has not necessarily translated into savings. Gen Xers (45%) are more likely than Gen Yers (27%) to have personally started saving for retirement.
Parents, Peers, Professionals, Periodicals …
Gen X and Y report many ways in which they receive financial information. More than half of Gen Y and X turn to a financial professional for advice.
However, even more turn to their parents or the Internet. According to the study, 70% listed parents as a major or minor source of advice, and almost the same number (69%) listed the Internet. Also, don’t underestimate the power of peers: Friends and peers are also at least a minor source of advice for 60% of people in Generation X and Y—but not likely to be the primary source.
What might be interesting for advisers trying to reach these groups of participants is that these younger generations are certainly likely to receive information online, but also obviously just as receptive to human interaction in order to receive financial advice.
Slight more than half of both generations report using a financial professional to obtain advice, with 54% citing a financial professional as a major or minor source of advice, according to the study. One-quarter report a financial professional as a major source of advice (23%), and 20% site a professional as their primary source.
Members of Gen X are more likely than Gen Y to cite a financial professional as a major source of advice (27% of Gen X vs. 18% of Gen Y), the study reports. And as can be expected, those with a higher education and income are more likely to use a financial professional as a primary source of advice.
The employer is definitely a source of information for Gen X and Y as well. About half (53%) cite their or their spouse’s employer as at least a minor source of financial advice, but only a small number (7%) cite employers as a primary source. The media and other relatives also received significant percentages as sources of information.
The full Preparing For Their Future study is available here.
See also:Gens X and Y Eyeing Retirement Savings Needs, Four Generations Agree: We Need More Advice, Y Not?, Talking to Twentysomethings