Millennial workers in a new survey were not only more confident making investment decisions on their own than were older generations, but were also very receptive to professional financial help, Schwab Retirement Plan Services reported Wednesday.
Despite the financial demands they face, millennials were taking positive steps with regard to their saving and investing habits, especially with their 401(k)s, the survey found, and 80% said they would like personalized 401(k) advice.
Schwab noted that workers in the 25-to-36 age group were especially reliant on 401(k)s for the money they will need in retirement, with 78% reporting that a 401(k) was their largest or only source of retirement income.
Another new study shows that an increasing number of employers are adding auto-enrollment and auto-escalation to their defined contribution plans.
The Schwab survey showed that millennials were disproportionately affected by money-related stress. Thirty-five percent said it had affected their job performance, compared with 18% of Gen Xers and 11% of baby boomers. Twenty-four percent of millennials cited student loan debt as a source of financial stress.
At the same time, 80% of millennials said they were caught up on bills and had some money left over at the end of the month.
“It’s heartening to see that saving for retirement has become a priority for so many workers, especially the youngest generation of workers, for whom retirement can seem like a lifetime away,” Steve Anderson, president of Schwab Retirement Plan Services, said in a statement.
“Our findings show that, in spite of — or perhaps because of — the financial challenges they faced as they entered the workforce, millennials know how critical it is to keep on top of their finances today with an eye toward tomorrow.”
Koski Research conducted the online survey of 500 U.S. workers who were saving in a workplace 401(k) plan; they were not asked at which institution they had their accounts. Respondents worked for companies with at least 25 employees and ranged in age from 25 to 70.
Professional Help Welcome
Twenty-five percent of millennial respondents said they invested the money they had left over each month in the stock market. In addition, 34% of millennials reported putting extra money toward their 401(k), compared with 20% percent of Gen Xers and just 8% of boomers.
Recent research by the Investment Company Institute showed that mutual funds were the most popular investment for U.S. households to meet retirement and other financials goals.
Millennials in the Schwab survey were savvier than older generations about the fees they paid for their retirement investments. Fifty-one percent said fees influenced their choice of 401(k) investments “a lot,” compared with 40% of Gen Xers and 38% of boomers who said this.
They were also more confident making investment decisions on their own, with 64% of millennials saying they were very or extremely confident making investment decisions solo, compared with 47% of Gen Xers and 39% of boomers.
Add a financial professional to the mix, and all respondents’ confidence rises. Eighty-five percent of millennials, 73% of Gen Xers and 72% of boomers said they would feel the same level of high confidence with the aid of a professional.
The survey showed that millennial respondents were highly receptive to professional financial help:
- 80% said they would like personalized investment advice for their 401(k)
- 64% said their financial situation warranted professional advice
- 93% said they used a financial wellness program at work
“No matter what stage of your career you’re in, a financial professional can offer guidance to help you make the most of your retirement investments,” Catherine Golladay, senior vice president for 401(k) participant services and administration at Schwab Retirement Plan Services, said in the statement.
“The earlier you begin to save and plan for the future, the more comfortable you’re likely to be in retirement. I’m encouraged to see so many millennials taking ownership of their finances, and to see that they are comfortable asking for help when they need it.”
— Check out ‘Rothification’ of 401(k)s Likely in Senate Tax Plan on ThinkAdvisor.