Marketing Corner – Millennials and Retirement

Marketing Corner – Thursday, October 5th, 2017

Millennials and Retirement

There’s no definite age range that defines the Millennial generation. Typically, you’ll find that many sources, publications, and institutes will offer a range somewhere between 1982-1995, though we’ve seen ages as far back as 1978 and as far forward as 2000.

This generation is relevant to financial advisors for many reasons. For one, some Millennials are now reaching their peak earning years, starting families, and otherwise presenting planning opportunities. Some Millennials may have a ways to go before hitting their financial stride, but will present opportunities in 5-10 years. Along with members of Gen-X, Millennials are set to receive the largest transfer of wealth ever. And, with retirement further off, Millennials are primed to benefit the most from early planning, with room for a mix of strategies.

You may be asking yourself, though, what do Millennials really think about retirement? How prepared are they for retirement?

Here is a quick shot of important facts about Millennials and Retirement.

Millennials Do Save For Retirement…

82% Millennials surveyed participate in an investment savings account. This actually outpaces what Gen X (77%) and Boomers (75%) reported in the survey. The explanation? Auto-enrollment in employee-sponsored plans. While this indicates that some Millennials may have an eye on retirement, the likely situation is that many Millennial employees accept their simple choices without further thought toward higher contribution levels. This can be great for Millennials to get a jump start on their retirement, but may mean they could benefit from dedicated, managed planning solutions.

…But They Do Not Save Enough, And Some Have Nothing

In a survey conducted by GOBankingRates, 61% of “Older Millennials” (defined here as those aged 25-34) have $1000 or less saved. The majority of this group (41%) have nothing saved. However, the number of those with $10,000 saved rose 5% over the previous years’ study (20%). Millennials do save earlier than previous generations. In contrast to Generation X and Boomers (age 27 and 31 respectively) the average Millennial with access to a defined contribution plan starts at age 23. This according to the 2016 Natixis Retirement Plan Participant Study, which also finds that most Millennials only contribute between 1% and 4.99%.

A Majority Are Unsatisfied With Their Financial Lives

A recent survey conducted by Wells Fargo found that the majority (69%) of Millennials want to get over their anxiety regarding money. And while nearly all surveyed (98%) indicated that feeling financially secure was important to their lives, only 32% stated they were satisfied with their financial lives. What’s more is that the study found that while 77% of Millennials do not have a financial advisor, nearly 40% state they want one.

Some Millennials Have Redefined Retirement

Another study found that Millennials save, but not necessarily for retirement. Rather—reflecting Millennial values—this generation saves for life experiences and desired lifestyles. Paradoxically almost, as quoted by head of Merrill Edge Aron Levine, “Young adults…are willing to do whatever it takes to achieve freedom and flexibility, even if it means working for the rest of their lives.”

Saving, But Not Planning

A recent Insured Retirement Institute report echoes what the Merrill Edge study found regarding this redefinition of retirement:

“Millennials want flexibility and choice during retirement: the majority associate the word ‘freedom’ with their feelings about retirement, and 50 percent believe retirement means being able to decide whether, and/or how much, to work.”

And as IRI President and CEO Cathy Weatherford put it “While Millennials are saving, most are not planning.” What does this all ultimately mean? It suggests that the Millennial generation is primed for smart retirement strategies and for financial advisors to help them actualize their retirement goals.

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About the author

Legacy Financial Partners - Legacy Financial Partners is an independent and full service Life Insurance and Annuity FMO that provides specific marketing solutions to help their clients succeed. Using dynamic tactics, an extensive support network and progressive marketing options, Legacy Financial Partners provides unique and specific development strategies to their business partners.

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