The majority of Millennials, about six in 10, say they would sacrifice some pay for workplace access to guaranteed retirement benefits, according to the Willis Towers Watson Global Benefits Attitudes Survey.
The survey shows younger workers’ appetite has declined over the last several years for forfeiting pay in favor of lower and more predictable health benefit costs. This is a complicated effect, the research shows, but it may have a lot to do with the emergence of Affordable Care Act (ACA) exchanges, as well as more innovative thinking among employers and service providers leading to smarter health care consumption.
The Global Benefits Attitudes Survey shows the number of Millennials willing to pay a higher amount for a guaranteed retirement benefit has increased from 42% in 2009 to 59% this year. While they don’t face an easy path to a secure retirement, the fact that a majority are apparently prioritizing retirement is encouraging, Willis Towers Watson says. Millennials absolutely must engage early in the retirement savings effort if they hope to build anything like a dependable lifetime income stream for their retirement years.
Other results show two-thirds of Boomers (66%) would similarly be willing to sacrifice some pay for more secure retirement benefits, versus half in 2009. However, only one-third of Millennials (32%) and Boomers (34%) are willing to pay a higher amount for lower or more predictable health costs, a decline from 43% and 45%, respectively, in 2009.
“Employees of all generations, including Millennials, are feeling vulnerable about their long-term security,” notes Steve Nyce, senior economist at Willis Towers Watson. “Employees young and old actually have a strong desire for more retirement security and are willing to give up pay to get more guarantees or a larger retirement benefit. Interestingly, employees seem to be saying they have enough health coverage now and are reluctant to pay more.”
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Asked how they would spend money if their employer “provided them with an allowance to spend on a variety of benefits,” Millennials said they would allocate more than half to health care and retirement plan benefits (27% each).
“Additionally, almost half of Millennials ranked pay and bonus over all other benefits if given a choice, a clear indication of their financial issues and need for more financial flexibility today,” Willis Towers Watson finds.
Not exactly a surprising finding, Millennials are also much more likely to embrace nontraditional benefits and work/life balance than Baby Boomers. Nearly one-third of millennials (32%) ranked more paid time off, greater opportunities for flexible work arrangements and career advancement, and options to purchase a wider variety of benefits as a top priority.
“That’s more than double the percentage of Boomers who want these benefits,” researchers observe.
“Millennials, because of their financial situation, are concerned over how to help make ends meet,” concludes Shane Bartling, a senior consultant at Willis Towers Watson. “But they also recognize they have long-term financial risks as well, and many agree with having their employer play an active role in encouraging them to better manage their finances. For employers, this is a good opportunity to help their employees make smart financial decisions at pivotal moments through the use of unbiased and personalized budgeting and projection tools.”
Additional research findings and firm information are available at www.willistowerswatson.com.