The latest Transamerica Retirement Survey of Workers reveals that Millennials (those born in ’79 or later) might be a new generation of “super savers.”
It turns out that we might all have something to learn from the generation that grew up with the Internet when it comes to retirement planning. Below you’ll find 15 facts about Millennials’ retirement readiness, followed by 7 steps for long-term success. You can read the full PDF of the 2014 Transamerica Retirement Survey of Workers here.
15 Facts about Millennials’ Retirement Readiness
Seventy percent of Millennials are already saving for retirement and started saving at the unprecedented young age of 22 (median).
Three out of four (76 percent) are discussing saving, investing, and planning for retirement with family and friends. Eighteen percent of Millennials “frequently” talk about it.
Two-thirds of Millennials expect their primary source of income in retirement to be self-funded through retirement accounts (48 percent) or other savings and investments (18 percent).
Four out of five (81 percent) are concerned that Social Security will not be there for them when they are ready to retire.
Many (41 percent) expect that they will need to financially support aging parents and/or other family members when they are retired. Another 23 percent of Millennials are “not sure.”
Sixty percent of Millennials plan to retire at age 65 or sooner, including 26 percent who plan to retire at age 65 and 34 percent who plan to do so even sooner.
Fifty percent of Millennials plan to work in retirement and, of those, nearly half (47 percent) plan to do so for reasons of enjoyment or staying involved.
Three out of four (76 percent) say that retirement benefits offered by a prospective employer will be a major factor in their decision on whether to accept a future job offer.
Among Millennials who participate in a 401(k) or similar plan and are offered a company match, their contribution rate is 10 percent (median) of annual pay.
The majority (62 percent) who are participating in a 401(k) or similar plan are using some form of professionally managed account such as a target date fund, strategic allocation fund, and/or managed account service.
Seventy-one percent of Millennials participating in a 401(k) or similar plan find mobile apps for managing their retirement accounts to be helpful.
Fifty-two percent of Millennials who provided an estimate of their retirement savings needs say they “guessed” what that figure should be. Just one in 10 have used a retirement calculator or worksheet.
Three in five (61 percent) want some level of advice when saving and investing for retirement, yet only 32 percent who are saving actually use a professional financial advisor.
Two-thirds (68 percent) of Millennials are “very” or “somewhat” confident that they will be able to someday fully retire with a comfortable lifestyle.
Despite the confidence-shaking events of the Great Recession, Millennials’ household retirement savings dramatically increased from $9,000 in 2007 to $32,000 in 2014 (estimated medians).
7 Steps for Long-term Success
Save for retirement. Start saving as early as possible – and as much as possible. Save consistently over time. Avoid taking loans and early withdrawals from retirement accounts as they can severely inhibit the growth of long-term retirement savings.
Consider retirement benefits as part of total compensation. Retirement plans, like other employer-provided benefits, are an important part of one’s overall compensation, yet can be overlooked when searching for a job. When comparing job offers, ensure that you know about all benefits offered by a prospective employer. If you currently work for an employer that doesn’t offer a retirement plan, ask your employer to consider setting up a plan.
Participate in employer-sponsored retirement plans, if available. Many employers also contribute to the company-sponsored retirement plan by matching employees’ contributions. Take full advantage of matching employer contributions, and defer as much as possible.
Calculate retirement savings needs, develop a retirement strategy, and write it down. One of the most important secrets to attaining retirement readiness is having a well-defined written strategy about retirement income needs, costs, expenses and risk factors. In creating a plan, factor in living expenses, healthcare needs, government benefits and long-term care. Envision future retirement and have a backup plan in case retirement comes early due to an unforeseen circumstance. You should periodically update your strategy as your circumstances and goals will inevitably change over time.
Get educated about retirement investing. Whether relying on the expertise of professional advisors or taking a more do-it-yourself approach, gain the knowledge to ask questions and make informed decisions.Learn about Social Security and government benefits, keeping in mind that benefits may change over time.
Seek assistance from a professional financial advisor, if needed. Ask your employer whether professional advisor services are available through its company-sponsored retirement benefits. If not, check with family and friends for referrals.
Be proactive about staying competitive in the ever-changing job market. Be proactive about keeping job skills up-to-date, performing well on the job, staying current on employment trends and marketplace needs, and even going back to school to learn new skills if necessary.