Millennials Are Concerned About Their Overall Financial Security · 2018. 6. 14. · Overall financial security is a big concern for the Millennial generation. According to a financial

Retirement Services

And These Worries Can Be A Distraction

Millennials Are Concerned About Their Overall Financial Security

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Contents

Introduction 3

Financially Insecure 4

Health Care Costs Put Retirement Security At Risk 6

Employers Are In A Powerful Position 8

Lead Workers To Financial Security Through Financial Wellness 9

Supporting Your Needs Today And Tomorrow 10

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Introduction

The Millennial generation is currently the largest in the workforce. These workers, age 21 through 35, grew up with the internet and mobile phones, and their preferences will likely drive change in the workplace.

While the Millennials face similar life phase challenges as generations before, this group is largely and uniquely challenged with student loan debt. They are very concerned about their overall financial security. Balancing debt and making ends meet with financial priorities like saving for retirement are a struggle. Financial stress is high, and many find themselves distracted at work over personal financial issues.

Balancing debt and

making ends meet

are a struggle

4

Financially Insecure

1 Employee Financial Wellness Survey. PWC, April 2017.


3 Bankrate Financial Security Index. June 2017.



Overall financial security is a big concern for the Millennial generation. According to a financial wellness survey conducted by PWC, workers of all ages share the same financial concern — not having enough savings for unexpected expenses.1 Millennials, however, are most concerned about having enough savings for unexpected expenses with 52 percent citing it as their biggest financial concern.2 More than half of workers of all ages are unprepared for unexpected expenses. Sixty-one percent admit they have less than six months of savings set aside for emergencies, including 24 percent that have no money saved for unexpected expenses.3

Millennials are most anxious over money matters that can immediately impact their financial security, including meeting monthly expenses (32 percent) and being laid off from work (21 percent).4 Saving for retirement is the fourth financial concern of this age group, with 20 percent worried they won’t be able to retire when they want.5

admit they have less than six months of savings

set aside61%

5

Many competing financial responsibilitiesDebt and other expenses prevent many from saving for the future, and Millennials are burdened with many financial responsibilities. Forty percent have student loan debt that impacts their ability to meet their other financial goals. And, those with loans are more likely to have credit card debt, greater difficulty meeting expenses, more financial stress, less retirement savings, and lower productivity at work.6

Financial stressFinances and money are the leading cause of stress for all workers. Almost half (48 percent) of the Millennial workforce is stressed about money, and it takes a toll on work performance more than workers of other ages.8 Roughly 40 percent are distracted by personal finances at work and nearly half (49%) spend three or more hours at work dealing with personal money matters.9 Financially stressed employees confess it has affected their health, relationships, work attendance, and productivity.

6 Employee Financial Wellness Survey. PwC, April 2017.




Financial Responsibilities Compete with

Retirement Saving7

40%

Student Loans

60%

DependantChildren

42%Parents + In-laws

6

Health Care Costs Put Retirement Security At Risk

Top retirement concerns for employees of all ages include running out of money (42%), health issues (33%), and health care costs (27%).10 The substantial cost of health care in retirement puts workers’ retirement savings at risk. Most believe health-related expenses will have an impact on their retirement, including 65 percent of Millennial-age employees.11 Health care costs in retirement will be significant — premiums alone are projected to cost a healthy 65 year old couple nearly $321,000.12 Despite these concerns, many employees are not taking action to build additional savings for these critical expenses. For example, just half of workers with access to a Health Savings Account (HSA) use it as a supplement to their retirement savings.

10 Employee Financial Wellness Survey, PWC, 2017.


12 HealthView Services: 2017 Retirement Health Care Costs Data Report, 2017.


60%72%

2017 2016

More are saving for the future13Debt & Spending are Rising17

1234 5678 9012 345612/31VALID

THRU

Credit card debtUse credit for monthly expenses they can’t afford

2017 2016 2017 2016

45%

30%

70%

53%

May need to raid their retirement savings for an unexpected expense

51%

7

Most save for retirementThumbs up to Millennial workers — most are saving for the future. Seventy-two percent are putting money away for retirement — a big jump from the 60 percent who were saving a year ago.14 Retirement confidence has also increased significantly. Fifty-four percent are confident they will be able to retire when they want, compared to 36 percent in 2016.15 However, more now say they plan to postpone retiring than those surveyed in prior years. Since 2013, the number of Millennial employees who plan to retire later has doubled, rising from 18 to 36 percent.16





60%72%

2017 2016

More are saving for the future13Debt & Spending are Rising17

1234 5678 9012 345612/31VALID

THRU

Credit card debtUse credit for monthly expenses they can’t afford

2017 2016 2017 2016

45%

30%

70%

53%

May need to raid their retirement savings for an unexpected expense

51%

8

Employers Are In A Powerful Position

Almost half of the Millennial workforce believes it is primarily the responsibility of their employer for supporting them during retirement, and they are also more loyal (62 percent) and attracted (72 percent) to employers who care about their financial well-being.18 Financial stress also deeply affects employees of this age group — and your business through reduced productivity. This puts employers in a powerful position when it comes to helping workers get retirement ready.

With so many employees relying on their retirement plan benefit for their future financial security, it’s critical employers design a plan that reduces errors and encourages better decisions:

Carefully choose plan features to encourage better retirement outcomes

The use of best practices and carefully matching plan defaults, investment menus, and other features to workforce needs can help drive better retirement decisions and outcomes. Some options you might want to consider include:


Safe Harbor

Satisfy nondiscrimination testing with

mandatory employer contributions to employees.

New Comparability

Contribute more money on a pre-tax basis through

a profit-sharing feature.

Roth 401(k)

Provides employees with the option for

tax-free withdrawals in retirement in exchange

for contributing after-tax dollars to

a tax-deferred account.

Automatic Enrollment

Increase participation by automatically enrolling

employees as they become eligible.

Third-party Plan Advisory Services

Allows you to offer your employees

online investment advisory services, with an option for managed

account services.

Save Smart®

Enables participants electing the feature to automatically increase their savings rate at designated intervals.

Options and Services For Your Plan

Plan Types

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Lead Workers To Financial Security Through Financial Wellness

Financial wellness programs can help employees manage the financial obstacles that prevent them from attaining financial security — and saving for retirement. Through these programs, workers can acquire skills to better manage current expenses, reduce debt, and make the most of their employer benefits.

Make preferences a priorityTechnology is a must for keeping this generation engaged in their retirement planning. With an increasingly mobile workforce, making planning fast and easy, and allowing employees to enroll, learn, and take action on the go, anytime, is critical to meeting their retirement planning needs.

With an increased mobile workforce,

technology is critical to meeting their retirement planning needs

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Supporting Your Needs Today And Tomorrow

Retirement benefits aren’t just about planning for the future. They are about attracting and retaining a motivated, productive workforce, day in and day out. ADP’s deep Human Capital Management knowledge means we make it easy for clients like you to create a successful retirement plan for your workplace.

About ADPAs one of the world’s largest and most experienced HR providers, ADP offers recruit-to-retire services and helps support employers on everything from basic payroll, benefits and recordkeeping to complex tools for talent management, compensation, and succession planning. ADP serves more than 700,000 clients worldwide.

Retirement benefits are about attracting and retaining

a motivated, productive workforce

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Need Page Headline

For more information about ADP retirement plans or how we make them easier to manage, please contact us today at (800) 432-401K or visit www.adp.com/401k.

Let’s Talk

The surveys, studies and other resource materials cited herein have been prepared by and are the property of the third parties named herein and are accurate as of the date prepared. The views expressed in this publication are those of the author, are intended for general information only and are not intended to provide investment, financial, tax or legal advice or a recommendation for any particular situation or plan, nor is this publication the sole authority on any regulation, law or ruling. ADP is not responsible for the content of, nor has it verified the accuracy of, any information obtained or the methodology used by such third parties or published in this whitepaper.

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Millennials Are Concerned About Their Overall Financial Security · 2018. 6. 14. · Overall financial security is a big concern for the Millennial generation. According to a financial