Asset manager State Street Global Advisors (SSgA) recently asked people participating in a company retirement plan about what they liked and what they’d like to see more of. Their study results are detailed in the Business Wire press release “401(k) Investors Want Automatic Savings Increases and More Help in Making Better Retirement Decisions According to New Study from State Street Global Advisors.” They found that the youngest working generation, referred to as Generation DC, desires even more support than those workers over the age of 25.
Employees across the board want employers to make it easier to save for retirement. They also want their employers to offer them expertise and guide them through the entire process with their 401k’s, 403b’s and 457 retirement plans. Three-quarters of employees want their company to show them exactly how saving now will pay for their financial future. This is one reason that so many employers are offering 401k annuity products, which spell out the dollar amount of lifetime monthly income that employees will receive in retirement. Close to three-quarters of the employees are in favor of employers increasing their contribution percentage by 1% each year automatically.
And while just over half of the entire workforce is interested in employers offering information on spending less and saving more, 62% of those 25 and younger would like that information offered. Interestingly, when asked if they are saving enough for their retirement, 82% of the young workers believe that they are, while 63% of the total workforce felt that way. I fear the percentage of workers without 401k, 403b, and other retirement plans that are confident they are saving enough for retirement would be very low. I’m sure it’s well under 63%.
Just under half of the under 25 group said that they have started saving more outside of their retirement plans in the last year, while that number was only 37% for all employees surveyed. Along those same lines, half of the younger employees would like some type of buddy program where people encourage others to save, but only 28% of all employees were for this type of program. It’s a good idea for employers to really engage the younger generation and increase their offerings when it comes to information about saving for retirement. They are eager to learn more and to improve their outlook for the future.
Based on the study results, SSgA recommends a few things to employers and their retirement plan sponsors. Make improvements to the process of enrollment for all ages of employees, especially because many older new employees have a previous retirement plan that they could transfer over. Give more guidance to employees when they make job changes, are getting close to retirement, and actually reach retirement. Realize that your younger generation has different attitudes about retirement and how they like information to be shared and adapt to make it better for Generation DC. Make sure as employers that you understand the differences between the generations and offer different programs to different employees. Regardless of age, employees have a hunger for more information and ways to make it easier to save for retirement in 401k and other plans.
Written by Rachel Summit