According to John Hancock Retirement Plan Services’ latest Financial Stress Survey, more than half of Millennials in the workforce are on track for a financially secure retirement, meaning they would be able to replace 70% or more of their incomes after they stop working.
Another survey published this week by Allianz Life, reported on in a white paper dubbed “The Gift of Time,” draws from similar data to reach rather different conclusions, describing Millennials as “the least financially prepared generation” and “the most overwhelmed by the idea of long-term planning.”
Reading both reports together presents an informative picture of Millennial workers, as those who have the most to lose and the most to gain when it comes to the success and stability of the employer-sponsored defined contribution (DC) retirement plan system.
According to the John Hancock research, new solutions, such as employers’ willing adoption of auto-enrollment—and to a lesser extent, auto-escalation—have helped Millennials begin saving earlier, and that, in turn, has helped to put their retirement savings on a decent course. Still, John Hancock finds Millennials say their top financial worries are “repaying college loans, their overall current financial situation, and emergency savings.” No surprise, retirement is less immediate for Millennials, so it is lower on their list of concerns, the research concludes.
“With Millennials, our challenge is not getting them to join the plan—automatic solutions have done that—but it is to engage them in their broader financial lives,” suggests Patrick Murphy, president of John Hancock RPS. “Millennials tend to do more of their own research up front, but then they often want to clarify some information, and validate their thinking, so there is still a place for exceptional, one-on-one customer support and expert advice.”
As a plan provider, Murphy adds that John Hancock “understands people have different needs as they plan for retirement. Our passion is to help identify and implement solutions to help them achieve their goals and, as a result, reduce or eliminate their financial stress.” One of those solutions is Morningstar’s HelloWallet financial wellness program, which John Hancock RPS began offering on its Total Retirement Solution platform in late 2015.
The theory from John Hancock and other providers’ perspectives is that once Millennials sort out more immediate concerns, their interest will naturally turn to the medium and long-term financial picture—and data supports this point.
NEXT: Millennials must commit to saving early