Millennials face a unique set of obstacles when saving for retirement, says a new study by Schwab Retirement Plan Services.
Every generation has its reasons not to save for retirement. For Millennials, more than any other, an unwillingness to sacrifice things they believe improve their quality of life and crushing student debt top the list. Schwab’s research echoes other studies of Millennial savings behavior, which find that they’re confused about the process, or squeezed by student loans, and generally need more financial education and support.
Millennials face several obstacles to meeting their retirement savings goals, which disproportionately affect this group more than any other. Moreover, although this younger generation believes they would benefit from help, they are using professional investment advice far less than their older counterparts. Forty-four percent are not saving more because they want to treat themselves to things like occasional dinners out and vacations, more than Gen Xers (34%) and Boomers (29%).
More than a third of Millennials (37%) can’t set aside more money for retirement because they are still paying off student loans. About half (49%) feel they are clueless when it comes to their best investment options, and only a third (34%) are extremely or very confident in their ability to make the best 401(k) investment decisions on their own.
While three-quarters (76%) claim they would like help managing their 401(k), only 22% are likely to seek out professional investment guidance, and just 7% are currently receiving it.
Catherine Golladay, vice president of participant services and administration at Schwab Retirement Plan Services, admits that managing a 401(k) can often be intimidating for young people with little to no investing experience. “Our survey found that six in 10 Millennials wished there was an easier way to choose the right investments for their 401(k),” she says. The firm’s recommendation, that receiving investment advice early on can ease anxiety and boost confidence, can be a clarion call to retirement plan advisers looking to support these Millennial plan participants.
Schwab Retirement Plan Services based its findings on online interviews between May 26 and June 3 of 1,000 401(k) participants working for companies with at least 25 employees.