Only 17% of Millennials in the workforce are on track to have enough retirement savings, according to a recent study by Financial Finesse. While younger employees might be very aware of the importance of paying off their student loan debt, saving up to purchase a home, or stashing money into an emergency fund- all sage financial practices- retirement preparedness is noticeably absent from many Millennials’ financial musings.
With the power of compounding and a longer time horizon on their side, Millennials are in the best position possible to get the most out of their retirement savings if they start now. Considering that half of Millennials believe that Social Security won’t even exist when they retire, this should mean more plan to rely solely on retirement accounts and insurance. So, why the lack of interest and enthusiasm? It all starts with a lack of communication.
For financial marketers targeting either business owners who manage Millennials or financial advisors who need to prospect Millennials, it’s a safe bet that these young consumers have a baseline understanding of personal finance. But that doesn’t mean that they will care about saving for retirement. Millennials need a trigger to help them understand the importance of contributing enough to their 401(k), IRA or other retirement plans.
“But retirement seems so far away to Millennials. How can I help my clients to get their Millennials excited to save for it now?” We’re so glad you asked.
- Talk More- The more marketers communicate about the importance of retirement savings, the more all consumers will think about it. But a quarterly email with a link to login to their plan won’t compel Millennials to save more. Help the younger audience by making resources, such as online retirement calculators, research, and access to financial advisors easily available – and remind them of these resources often. Create communications that don’t only focus on how to save for retirement, but emphasize why they should care. Most Millennials think “What’s in it for me?” and the implied benefit of a strong retirement savings strategy is harder for younger employees to understand, than someone who is closer to retirement.
- Matching- Matching retirement fund contributions is leading by example. Encourage your business owner clients to show their employees how truly important investing in retirement is by investing in their future for them.
- Roth Options- Roth options are becoming increasingly more popular, and are especially appealing to younger investors who can take advantage of long term compounding and potentially tax free withdrawals in retirement.
- Make it Easy- The best way to get Millennials to increase their contributions is to make it so they don’t have to do it all. Promoting an automatic annual increase option to their retirement plan helps investors save more year after year without lifting a finger.
Retirement is probably not the main financial focus for Millennials, but by sprucing up plan offerings and increasing promotional communications from employers and advisors alike, marketers can help get Millennials thinking about and contributing more toward their retirement.