PLANADVISER - March/April 2021 - 23

Millennials
* Birth Years: 1981 - 19961
* Age Range: 25 - 402
* Generation Size: 72.1 million3
* Target savings amount across all savings: At least 1 times salary by age
30; at least 3 times salary by 404
FINANCIAL CHALLENGES
As the largest and fastest growing segment of the workforce, Millennials are
categorized as driven and achievement-oriented. Yet, many in this generation are
experiencing growing financial insecurity due to major market downturns.
While Millennial workers are, in fact, saving toward their retirement, a 2017
Wells Fargo Advisors study found this group to be cautious of riskier investments.
Experts warn that avoiding such investments or investing conservatively can
potentially prevent the saver from meeting retirement goals.
Adding to Millennials' uncertainty are a host of competing financial demands,
including caregiving expenses, student loan debt and mortgage payments or rent,
says Lori Lucas, president and CEO of the Employee Benefit Research Institute
(EBRI), in Washington, D.C. Millennials-the oldest being 40-are establishing
families and caring for parents while continuing to owe.
" Millennials demonstrated that they do take saving seriously. They're benefiting
from their savings vehicles, but they also have a lot more competing
concerns than other generations do, " Lucas says.
Experiencing these concerns all at once affects how individuals save. Even as
Millennials allocate a portion of their income toward retirement, they lag behind
what other generations had saved by this stage of life, says Wells Fargo Advisors.
Memories of downturns, and the market volatility caused by COVID-19, have
increased the group's worries. An Edelman Financial Engines survey found Millennials
have faced greater stress than have other generations during the pandemic,
as many had just begun their financial recovery from 2008's recession.
EFFECTIVE PLAN DESIGN ELEMENTS TO IMPROVE OUTCOMES
Millennials can profit from key plan design features such as automatic enrollment
and benefits such as flexible leave policies and reimbursement accounts for child
care, says Steve Vernon of the Stanford Center for Longevity.
A Purdue University study found this group to be especially drawn to
employers with a good work-life balance and flexible schedule.
" Offer a referral service to employees and a flexible leave policy that allows
people to take care of their caregiving needs, " Vernon says. He also recommends
that financial advisers suggest life insurance and disability plans
for Millennial workers.
Debt management advice is another essential tool for financial advisers
to utilize, according to Lucas. Encourage plan sponsors to offer workshops
and educational materials on managing debt, and/or to provide a student
loan debt repayment feature, she adds.
Moreover, Millennial workers tend to be receptive to advice. An SHRM
study reported that this age group is more likely to ask for mentors (42%) or
training (35%) than the preceding generations.
The costs of the pandemic have highlighted the need for emergency savings
accounts-especially for Millennial employees, says Vernon. He urges advisers to
recommend that tool to increase these workers' security and build financial wellbeing,
while reducing their temptation to tap their retirement plan.
1Pew Research Center. 2Pew Research Center. 3Statista. 4
Fidelity Investments.
48% of Millennials
said the stock
market is " not
a good place "
to grow their
retirement savings.
- Wells Fargo Advisors
30% said they will
be unable to retire
comfortably until
age 70 to 80.
- The Harris Poll, for Daily
Pay, Funding Our Future,
and Center for Financial
Security at the
University
of Wisconsin
planadviser.com March-April 2021 | 23
http://www.planadviser.com
PLANADVISER - March/April 2021

Table of Contents for the Digital Edition of PLANADVISER - March/April 2021
