With 53.5 million workers, Millennials just became the largest generation in the US labor force, so retirement is not just a Baby Boomer issue. Millennials are concerned about retirement planning too. As a business owner, there are key behaviors to take into consideration when developing a retirement plan for Millennials.
Social Security Concerns
Many Millennials expect Social Security to go bankrupt before they retire. Because of the staggering debt from things like student loans, they are pinching their pennies. According to Time Magazine, Millennials save on average about 8% of their paycheck for retirement, while Baby Boomers save 9%. The difference does not seem like much at first glance, but when you consider the difference in average income among Millennials and Boomers, the numbers are actually quite significant. These saving behaviors indicate the concern for retirement among the younger work-force and a need for retirement plans that are more flexible.
Years of Service
Years ago, it was common that upon being a hired, an employee would be hired for life (or many years). Today’s hiring expectations run very differently. It is common to see a worker stay with company for five years or less. This behavioral change has lead to a shift from the once common pension plan to a contribution plan. According to Transamerica, many Millennials that are offered a company match and participate in a 401(k) are contributing about 10% of their own annual income. This means that Millennials are now more autonomous when it comes to retirement planning than their parents or grandparents.
Millennials are a generation that are comfortable with technology. Transamerica discovered that 71% of Millennials who are currently engaged in a 401(k) are comfortable with managing their plan on a mobile app. Companies should take note of this statistic because this is a change from Baby Boomers who are not as comfortable using online tools and mobile apps as their younger counterparts.
Optimizing a plan now for your younger employees will demonstrate your commitment to their professional and personal development. At Staffscapes, we can help you develop a retirement plan for all your employees. Contact us today for more information.