Affluent Gen Y investors are eschewing defined contribution plans in favor of online brokerages, according to a survey released Tuesday by Hearts & Wallets, a consumer financial research company.
The reason, the survey found, is that they value financial independence more than a traditional retirement that puts an expiration date on their career.
Almost three-quarters of Gen Y respondents with at least $100,000 in household assets said they have an online brokerage account, compared with two-thirds who have a defined contribution plan.
Hearts & Wallets surveyed more than 5,000 households for the report.
Three-quarters of these affluent Gen Y investors said they aren’t planning for “traditional retirement,” the survey found. They have short-term savings goals like vacations and emergency funds, but their long-term goal is to avoid depending on an employer for their livelihood. For example, 42% said they want to save enough money so that they can work less and spend their time doing whatever they want when they get older.
“Gen Y desires financial independence rather than retirement,” Chris Brown, Hearts & Wallets LLC principal, said in a statement. “Gen Y could become more engaged with DC plans if the financial services industry promoted more qualified plan benefits beyond saving for retirement, like tax deferral.”
Brown added that since many Gen Y investors don’t own homes and don’t qualify for the mortgage interest deduction, other perks like tax deferral or employer matches can be “very appealing.”