A new study by Prudential Retirement shows that the Millennial generation is highly motivated to save for retirement and would plan ahead if they knew more about retirement benefit options from their employers.
More than 32 million Millennials—those born in 1991 or later—are in the American workforce and 83 percent say that seeing what can happen to people who don’t save enough for retirement makes them want to save more.
“Our research dispels the myth that Millennial workers don’t care about preparing for retirement,” said George Castineiras, senior vice president of Total Retirement Solutions. “Saving for retirement ranks highly in this generation’s list of financial priorities and we are encouraged that these younger workers are taking responsibility for their future.”
The study presented Millennial workers with a “Retirement 101” quiz and also offered them the opportunity to grade their workplace retirement plan’s education, tools and information. The quiz challenged survey respondents with a real-life test asking them to allocate 10 to 20 percent of their monthly income to various discretionary areas, after paying all necessary expenses, such as housing, utilities, food and transportation.
The results demonstrate that Millennial workers prioritize saving for retirement ahead of leisure spending, saving for vacation or a house. At the same time, the study revealed clear gaps in Millennial workers’ overall knowledge about retirement planning, as well as deficiencies in tools available to them to help them with it.
The “Younger Workers and Retirement” study also discovered that, although Millennial workers understand retirement planning as a concept, they also perceive their employer-sponsored plans as complex and overwhelming. The Prudential survey suggests more rewarding experiences, as well as interactive, retirement-focused educational solutions, would motivate Millennial workers to contribute more to their retirement savings.
“This population of workers readily adopts new and emerging technologies and therefore it is important for plan sponsors to find ways to motivate these workers and keep them engaged in their retirement planning with personalized, high-tech solutions that they find compelling,” said Castineiras.
The survey received completed responses from 800 employed U.S. consumers between the ages of 21 and 29 who are eligible to enroll in their employer-sponsored defined contribution plan.
Northstar Research Partners, Inc., a third-party independent firm, not affiliated with Prudential, conducted the survey online from July 28 to Aug. 1, 2012. The study did not identify Prudential as the sponsor.
Prudential Retirement delivers retirement plan solutions for public, private, and non-profit organizations.