Millennials, more so than other generations, grasp the importance of retirement savings, a survey by Natixis Global Asset Management found.
Sixty-nine percent of Millennials, compared to 55% of Baby Boomers, think workers should be required to save for retirement. Eighty-two percent of Millennials, versus 77% of Generation X, think employers should be required to offer retirement plans. Seventy-six percent of Millennials, compared to 66% of Boomers, think companies should offer matching funds, and 84% of Millennials want investment options that reflect their personal values.
Millennials began saving for retirement, on average, at age 23, while Gen Xers didn’t start until age 27 and Boomers at 31. While 81% of Boomers are counting on Social Security, only 55% of Millennials think it will still be in existence by the time they retire.
Sixty percent of the 951 workers that Natixis surveyed said they have figured out how much they will need in retirement. Boomers think they will need an average of $934,677 and are 34% on the way there ($317,790). Gen Xers say they will need $810,387 and have 24% of their target saved ($194,492), and Millennials have a target of $869,662 but have only 8% of this saved ($69,573).
Forty-one percent of workers save less than 5% of their salaries, and 28% have taken out a withdrawal from their retirement savings. Among Millennials, withdrawals jump to 43%.
“Younger workers in particular are grappling with a different set of retirement challenges, compared to previous generations,” says Ed Farrington, executive vice president for retirement strategies at Natixis. “Their retirement savings strategies are encumbered by a number of factors such as student loan debt, a lack of company pensions and a sense of doubt that Social Security will be a source of income in retirement. Employers would do well to focus on designing comprehensive plans that offer greater incentives and a better range of investment choice that especially appeal to this large portion of the workforce.”NEXT: How many aren’t participating?
The survey found that 31% are not participating in their employer’s retirement plan. The No. 1 reason they give as to why is that their employer is not offering enough of a match, or no match at all (48%). Thirty-five percent said it is due to rising health care costs, and 20% said it is because they are saving for their child’s education. Thirty-three percent of Millennials said student loan debt is an impediment.
Among the 69% who are participating in their retirement plan, 63% say it is because of the company match, 56% cite the tax incentives, and 52% point to the automatic deductions from their paycheck. Sixty-nine percent say they would contribute more if their employer boosted their match.
Workers who have received financial advice have, on average, 10% more saved than those who did not. Seventeen percent said they would save more if they had access to financial advice. However, only 30% of the workers surveyed said their employer offers financial advice.
Eighty-seven percent said they would save more if they were permitted to participate in their company’s retirement plan from the first day they started working there. Twenty-three percent said they would be incentivized to save more if their plan automatically escalated their contributions.
Forty-five percent said they did not know how much they will need for retirement. Natixis says that financial education is obviously needed, as only 55% correctly answered a question about compounding interest.
CoreData conducted the survey for Natixis in August and September.