Workers under 35 Interested in Investment Advice

The survey of more than 2,000 retirement plan participants by the Spectrem Group compared the retirement attitudes, deferral rates, investment decisionmaking and investment choices of younger workers – those under 35 – to that of older workers and also looked at the differences in these areas in terms of gender and income.

According to Spectrem, plan providers can become identified as the adviser of choice among plan participants. Most young participants have not felt the need to go to a certified financial planner (CFP) or other adviser so the provider can fill this position early on and maintain it throughout the lifecycle of the participant.

The survey found that women are more likely than men to use a plan provider representative or family and friends as a source of advice. Meanwhile, over 40% of young men consider themselves to be self directed.

Retirement Funding Confidence

Also, retirement plan participants under 35 are less confident they will have enough money to live comfortably in retirement than their older counterparts and are slightly less likely to have a well-defined strategy for saving for retirement, Spectrem found.

On average, younger participants are deferring only 6.3% of their salary into their retirement plans, which is 1.3% lower than older participants. These deferral rates increased as household incomes increased and the average rate is higher for males than females.

They survey found that 45% of younger workers expect to have enough money to live comfortably in retirement, compared to half of older workers and that females under 35 are more optimistic (51%) than males (38%) in that age group about having sufficient retirement savings.

There was no significant difference among younger and older workers in terms of having a well-defined investment strategy; however, those with those participants making $50,000 to $100,000 annually are the most likely (53%) to have a well-defined strategy than the other two income brackets. Within the under 35 segment, 71% of males believe their investment choices will produce a good return compared to 62% of females.

Young participants are more likely (46%) than older workers (35%) to take a higher investment risk in order to earn a higher return and younger male workers are more likely (59%) than their female counterparts to absorb a higher risk. Also, those making under $50,000 a year are the most likely (61%) to want a guaranteed return on their retirement plan money, compared to 31% of workers making over $100,000.

Spectrem Group conducts ongoing monthly surveys of defined contribution plan participants. This report is based on a total of 2,009 telephone interviews with retirement plan participants. Included in this sample are 400 retirement plan participants from a focused survey who answered questions in regards to communication topics. The sample of participants under the age of 35 totaled 285.