Only 55% Started Saving for Retirement Before Age 28

Among those participating in a 401(k) plan, 70% or more say company matches would be very motivating to save more.

Eighty-five percent of Millennials believe it is important to start saving for retirement before age 28, but, in fact, among people of all age groups, only 55% start saving before that time, according to Cerulli. The most frequently cited reason for not starting to save for retirement is that they do not make enough money.

“For Millennials, who are generally at the lower end of the income spectrum and face a host of competing financial priorities, this is often a legitimate reason,” says Cerulli Analyst Dan Cook. “Thinking of retirement, which is 30 to 40 years away, in the same light as immediate savings needs such as rent, mortgage and groceries is also a challenge for this group. Education on topics such as personal budgeting, student loan debt and adjustments to spending habits can help Millennials free up funds for retirement savings that they previously thought were unavailable.”

Company matches can also motivate Millennials to start saving, Cerulli says, as 79% of those younger than 30 and 70% of those between the ages of 30 and 39 said company matches would be very motivating to them to increase their 401(k) contributions. “This group of younger investors communicates that, if their employer were to offer greater matching contributions, they would be highly likely to save more for retirement,” Cook says.

Millennials also greatly value online tools; 37% of those younger than 30 and 45% of those between the ages of 30 and 39 value 401(k) online tools. By comparison, only 4% of those older than 70 find online tools valuable.

“Members of this demographic frequently interact with digital bands and applications such as Amazon, Uber and Facebook,” Cook says. “Providers should recognize that Millennials are accustomed to these digital interactions and seek to engage them in this fashion.”

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