Many “Generation Y” employees would just as soon let someone else manage their retirement savings.
“Today’s youngest workers appear eager to embrace a radical design of U.S. retirement plans,” according to researchers in the retirement services unit at Prudential Financial Inc., Newark, N.J. “More younger workers than not preferred an ‘auto-pilot’ approach rather than the more tradition ‘do-it-yourself’ style of retirement plan.”
The researchers published those conclusions and figures, backing them up in a summary of results from a recent worker survey.
The survey team used the Internet to poll 300 workers ages 21 to 30 and 300 workers ages 55 to 64.
All of the workers polled were working at employers with 401(k) plans, 403(b) plans or 457 plans.
The younger “Generation Y” survey participants were more enthusiastic about the idea of managing their own retirement plan assets than older baby boomer and “Silent Generation” participants were.
Men were more eager to control their own investments than women were.
But even the Generation Y men who participated were more likely to favor an auto-pilot approach than a do-it-yourself approach, the Prudential researchers report.
In the 1970s and 1980s, when inflation started eroding the purchasing power of defined benefit pension plan benefits, many employees complained about lack of control over their retirement income.
Employers responded by setting up 401(k) plans that let employees set their own savings rates and allocate their own assets.
But now, only 31% of the baby boomer and Silent Generation retirement plan participants surveyed say they will have enough savings to quit work at the age hoped, and only 14% of the older non-plan participants surveyed expect to have enough savings to quit work on schedule, the researchers report.
When the survey team told survey participants about a package of several different automatic plan features–automatic enrollment, a minimum initial contribution rate, an automatic contribution escalation program, automatic asset allocation, and automatic annuitization once plan members begin collecting retirement benefits–about 76% of the older participants said they would recommend that auto-pilot package to younger workers.
When the survey team described the auto-pilot package to the Generation Y participants, 48% of the young men said they preferred the auto-pilot package, and 39% said they preferred a do-it-yourself approach.
About 59% of the Generation Y women said they preferred the auto-pilot package, and 23% said they preferred a do-it-yourself approach.