participate in the company 401(k)
plan. And at 33, she’s squarely in the
millennial generation herself.
Bulger says she was excited to
start saving after working at smaller
companies that lacked retirement
plans. “As soon as I started at a
company with a 401(k), I signed up as
soon as I could,” she says.
But Bulger finds that some other
millennial workers balk at enrolling
out of concern about taking home
a smaller paycheck. “For younger
employees, [the deduction] seems
really large,” she says.
Bulger has had some success
getting younger workers to participate
in their 401(k) plans by emphasizing
how small the deduction often is.
These workers may make so little that
“typically, it’s only $20” withheld each
pay period, she says. Once they realize
it won’t affect their daily life, they just
leave it and continue to contribute a set
percentage of their pay, she says.
Employers can help millennials get
over the initial hurdle by adopting an
auto-enrollment feature in their 401(k)
plans, experts say.
With student loans burdening
many millennials, “there’s only so
many dollars to go around,” says
Martha Hayward, a vice president for
marketing at Boston-based Fidelity
Investments, a major provider of
employer-sponsored 401(k) plans. To
A new report by investment giant
Vanguard, How America Saves 2017,
found that the average participation
rate in its 401(k) plans with auto
enrollment was 90 percent, compared
to an average of 81 percent for all plans.
When it comes to designing
retirement plans that suit millennial
employees, auto enrollment is just
the beginning. Other “autopilot”
plan features that employers can
choose to simplify retirement saving
for employees are rapidly gaining
popularity. These include automatic
contribution increases and the inclusion
of “target date” mutual funds that
rebalance their investment mixes over
time to better fit the likely risk tolerance
of account holders as they age.
By 2016, 90 percent of the 401(k)
plans that Vanguard administers
offered target-date funds and 72
percent of all participants invested
in them, according to the firm’s
2017 report. In addition, Vanguard
reports that 45 percent of the plans it
administers have adopted automatic
enrollment, up from 27 percent in 2010.
Betterment is among a handful of
investment firms that have taken the
autopilot idea a step or two further,
offering “robo-investing” services to
retirement savers. The New York-based company is courting millennials
by offering a combination of automated
and human advice. In July, the
company announced it also will allow
account holders to ask questions of
BY JACK ROBINSON Fred Thiele recalls a 22-year- old employee approaching him about a problem with er 401(k) account. She had hit the IRS annual limit for contributions, which currently is $18,000. Though her etirement was at least four decades away, she worried that she still wasn’t saving enough.
“I was stunned by the question,”
says Thiele, who is general manager of
global benefits at Microsoft Corp.
Employees at the Redmond, Wash.-based tech giant, where salaries are high
and benefits generous, are hardly typical.
But Thiele tells the story to illustrate
a point that experts make about
millennial workers in general: Despite
old stereotypes painting them as
entitled and disengaged, millennials, on
average, are responsible, even diligent,
about saving for retirement. Though
some millennials struggle with fear and
ignorance about managing their 401(k)
accounts, these workers are eager for
financial education, experts say.
The 17th annual Transamerica
Retirement Survey of Workers,
published in August 2016, found that
millennial workers started saving
at a median age of 22—earlier than
Generation X or baby-boom workers,
who began saving at median ages of
28 and 35, respectively. The survey
Stereotypes notwithstanding, millennial workers
are actively saving for retirement. But many still
struggle with fear and ignorance in managing
their 401(k) accounts. Experts—and millennials
themselves—say employers can help.
also found millennials are deferring a
median of 7 percent of their income—
barely lower than the 8 percent median
for all workers surveyed, despite their
relatively lower incomes and long
Moreover, the survey found,
millennials outpaced older generations
in the growth of their retirement
savings from 2007 to 2016 —by
244 percent over those nine years,
compared to 116 percent for Gen X
workers and 96 percent for boomers.
The 2017 Plan Wellness Scorecard, an
August 2017 study by Bank of America
Merrill Lynch, found that 82 percent
of millennial employees enrolled in
the 401(k) plans it administers made
contributions in 2016—well ahead of the
rate for Gen X workers (77 percent) and
boomers (75 percent).
For all their willingness to save,
millennials certainly face financial
challenges—including, for some,
relatively low incomes and high
student-loan balances. Fear and lack of
knowledge about investing also may be
barriers, experts and employers say.
For many young workers, getting
started is the hard part. Their household
budgets usually are slim, and investing
for the far-off future is a difficult
commitment to make—especially for
young workers unfamiliar with the
nuts and bolts of investing, such as
understanding the difference between
mutual funds and ETFs or evaluating
investment fees and rates of return.
Kat Bulger sees the issue from
two perspectives. As the resident
HR professional in a national home
healthcare company’s Central California
office, part of her job is encouraging