Presenting at the 2014 National Tax-Deferred Savings Association (NTSA) 403(b) Summit in Washington, D.C., Lisa Greenwald Schneider, research director at Greenwald & Associates, said contrary to the image the younger generations have of being very connected to the Internet and mobile products, the survey found Gens X and Y respondents regardless of whether they are educators or not prefer to get advice in person. But, more about the overall survey results will be revealed later. Nearly six in ten (58%) Gens X and Y educators reported they prefer to learn about financial planning issues at work, rather than on their own.
According to Schneider, they do preliminary research online and after receiving advice, they like to use online account management, “but for decision points, they want to talk to someone.” She said the generations (X=born between 1965 and 1980, Y=born between 1981 and 1999) also like online tools, but they then want advice about the results they get from the online tools. Nearly half (48%) of Gens X and Y educators believe a financial adviser or planner is a major source of information for retirement products, outranking the Internet by a wide margin (9%).
The study shows there’s much Gens X and Y educators need to learn. Sixty-three percent rank saving for retirement as very important (the highest percentage for all financial goals), and 60% of educators say they feel they are “on-track” or “ahead of schedule” with saving money for retirement. However, only 23% of educators in these generations have tried to calculate how much they need to save for retirement. “Do they know what ‘on-track’ means?” queried Schneider. She noted that educators were less likely than the total survey population to feel knowledgeable enough to save and invest for the long term.
Seventy-three percent of Gens X and Y educators reported having access to a defined contribution plan, such as a 401(k), 403(b) or 457 plan. But Schneider notes educators are more likely to have a pension, although more reported having a defined contribution plan than a pension. Schneider said she believes this indicates many educators in these generations do not know what kind of retirement plan they have. “There’s a real opportunity to educate the educators about how they should be saving in and out of the workplace,” she told Summit attendees.
When asked what would prompt them to save more for retirement, the top answer for Gens X and Y educators (68%) was changes to retirement benefits at work (such as elimination or reduction in DB benefits). Sixty-two percent indicated they would save more when their debts are paid off. Nearly six in ten (58%) reported they would participate or contribute more to their workplace retirement plan if there were greater in-person education and advice.
Schneider said advisers in general may not be paying attention to Gens X and Y, with so many Baby Boomers retiring and needing help, but the younger generations are set to offer even more investable assets in the future, and “the workplace is a good place for advisers to get to them and offer them what they need.”
The “Gen XY Financial Maturity: Balancing Act” study was performed by Greenwald & Associates, and commissioned by Security Benefit, from April 8 to April 21, 2014. Security Benefit commissioned an oversample of about 500 K-12 educators, mostly classroom teachers. Participants were between the ages of 21 and 48. Results from the overall survey will be revealed soon.