Millennials Need to Put Retirement Strategies in Writing

While Millennials are very focused on retirement-related issues, these employees still need to create a strategy for long-term retirement success, according to a survey from the Transamerica Center for Retirement Studies.

Millennial employees (those born between 1979 and 1996) are focused on retirement in a big way, says Catherine Collinson, president of the center. “The 15th Annual Transamerica Retirement Survey finds that three out of four are already discussing saving, investing and planning for retirement with family and friends. Millennials are twice as likely to frequently discuss retirement compared to their parents’ generation,” she says. “We also find that 18% of Millennials frequently discuss the topic, compared with just 9% of their Baby Boomer counterparts.”

However, even with this awareness of retirement-related issues, Millennials are still hesitant to put their plans for retirement into writing. While 59% of Millennial employees say they have a retirement strategy, only 13% have a written plan and the other 46% have a plan but have not written it down, according to the results of the survey. Among those who have estimated their retirement savings needs, 52% say they guessed and only 10% have used a retirement calculator or worksheet.

“One of the most important secrets to attaining retirement readiness is having a well-defined written strategy about retirement income needs, costs, expenses and risk factors,” says Collinson, who is based in Los Angeles. “Over the course of Millennials’ working lives, the retirement landscape will inevitably change. It’s important to begin planning for retirement now and periodically update those plans over the coming decades.”

The results of the survey recommend several strategies Millennial employees can use to create a retirement strategy for the long term, including:

  • Save for retirement. Start saving early and save as much as possible, and save consistently over time. Avoid taking loans and early withdrawals from retirement accounts as they can inhibit the growth of long-term retirement savings.
  • Consider retirement benefits as part of total compensation. Retirement plans, like other employer-provided benefits, are an important part of one’s overall compensation. When comparing job offers, Millennials should make sure they know about all benefits offered by a prospective employer. If working for an employer that does not offer a retirement plan, Millennials should not be afraid to ask about establishing one.
  • Participate in employer-sponsored retirement plans, if available. Many employers also contribute to the company-sponsored retirement plan by matching employees’ contributions. Millennials should take full advantage of matching employer contributions, and defer as much as possible.
  • Calculate retirement savings needs, develop a retirement strategy, and write it down. One of the most important secrets to attaining retirement readiness is having a well-defined written strategy about retirement income needs, costs, expenses and risk factors, according to Transamerica. In creating a plan, factor in living expenses, health care needs, government benefits and long-term care. Envision future retirement and have a backup plan in case retirement comes early due to an unforeseen circumstance. Employees should periodically update their strategy as circumstances and goals change over time.
  • Get educated about retirement investing. Whether relying on the expertise of professional advisers or taking a more do-it-yourself approach, gain the knowledge to ask questions and make informed decisions. Learn about Social Security and government benefits, keeping in mind that benefits may change over time.
  • Seek assistance from a professional financial adviser, if needed. Millennials should ask their employer whether professional adviser services are available through its company-sponsored retirement benefits. If not, check with family and friends for referrals.

Collinson adds that a good job is also a strategically important ingredient for personal retirement security. “It’s virtually impossible to save consistently over time without a steady income. Stay competitive in today’s job market by excelling at your current job, keeping your skills up to date, and staying current with employers’ needs,” she says.

The survey was conducted online within the United States by Harris Poll, on behalf of Transamerica Center for Retirement Studies, between February 21 and March 17, among a sample of 4,143 full-time and part-time workers, including 1,021 Millennials, 1,120 Generation Xers, 1,805 Baby Boomers, and 197 employees who were born prior to 1946.

More information about the survey, specifically about Millennials, can be found here.