For several posts now I have talked about saving for retirement and its importance. In this brief blog we will look at Generation Y or Millennial when it comes to jobs and savings. Now most people would define a Generation Y individual as someone who is between the ages of 18 and 35. According to an article I read on TheStreet.com Generation Y individuals are more likely to switch or change jobs that are comparable for one that offers a better retirement benefits package. According to the article about three quarters of all Generation Y individuals say that the retirement benefits that they are offered play a major factor in their decisions on what jobs they will accept.
Generation Y workers do indeed value their 401(k) accounts almost 90% in fact. When compared to other generations, the Generation Y worker is offered a 401(k) about 70% in their jobs while Generation X and the Baby Boomers are closer to 80%. While there are fewer jobs that offer Generation Y workers a workplace savings plan almost 70% of them are saving either through work or a similar plan somewhere outside of the workplace. And they are listening to older investors and financial professionals who say start early as they are beginning to save at the sage of 22. Compare that to Generation X workers who started on average at age 27 and the Baby Boomer who joined the savings party at an average age of 35.
Not only did the Generation Y worker listen to the start early portion that also heard the message of save more. On average a Generation Y worker contributes about 8% of their salary as compared to Generation X at 7% and the Baby Boomers at 10%. When one considers the employer’s match the Generation Y workers participation rate climbs from about 65% to 80% and they are actually saving closer to 10% of their salary.
And unlike many other people who are actively saving for retirement in a variety of accounts the Generation Y individual opts for the professionally managed money. I am not saying that these young productive members of the workforce are engaging with financial planners but they use wealth management site that I will examine in an eBooklet in the near future, risk allocated funds or what many people term as target date funds.
While it is always easy to preach save early and often it is good to see an article that reinforces the fact that a whole generation is taking advantage of this and doing it with some professional guidance of some sort.
