Millennials Need a Better Education on Retirement Saving
By: Bryan Hum
When it comes to saving for retirement, the topic of discussion is usually centered on older employees edging closer to 65 and rightfully so. That being said, millennials coming out of high school, college, and graduate school have little to no understanding of how present decisions can adversely affect them decades down the road. As of 2015, 46% of millennials said they get no information on financial matters through workplace or educational establishments, and an alarming 90% estimated the amount they would need in retirement by taking a blind or educated guess rather than basing it on industry data.
For many millennials, their first exposure to the world of 401(k)s, investments, mutual funds, and more, is with their first full-time job. Even then, few are given a proper introduction into this complex world. With nothing more than a handout and Google, many are left to their own devices to navigate a technical, mystifying landscape. The result? Most setting aside less than necessary in order to pay for more pressing expenses such as rent, bills, and student loans. By early 2017, almost half of the 40% of working millennials with student loans cited them as the most significant impact on their ability to meet other financial goals.
Millennials need the opportunity to learn basic retirement terminology, be prepared to make assessments of various retirement plans, and be able to decide which plan is right for them based on present circumstances, future approximations, and sound data. This could come in various forms, such as a modern home economics class in high school or required courses on financial planning and wellness in college. These opportunities to learn would not go to waste, as 77% of millennials said that they want the stark truth about how much they need to save for retirement. Providing millennials and subsequent generations with better tools, earlier, will allow them to make sensible decisions where it counts and ease the transition into retirement.
Bryan Hum is a Public Policy Associate and lawyer, working on retirement and compensation policy development and advocacy for The ERISA Industry Committee (ERIC). ERIC is the only national association that advocates exclusively for large employers on health, retirement, and compensation public policies at the state, federal, and local levels.