Millennials entering the workforce today are very unlikely to ever see a traditional pension as part of a benefits package. Today, young workers need to focus on different ways to save money for retirement, including 401(k) plans that are adopting pension-like features. The good news is the number of workers enrolling in a 401(k) plan or raising their contribution rose 82% between 2012 and 2015, according to a report from Merrill Lynch.
Rise in Millennials Saving for Retirement
Some of the growth in new 401(k) plans can be attributed to millennials that have entered the workforce, but the driving force might be that employers are automatically enrolling workers and simplifying retirement savings options. Millennials are in the best position when it comes to retirement planning with a 401(k) plan. They have the greatest length of time for their investments to grow, but they are only at an advantage if they are actually enrolled and funding their accounts.
Millennials are aware of concerns about Social Security funding and are witnessing their baby boomer parents struggle with not being fully prepared financially for their retirement. The financial climate and the changes in employer packages both contribute to the rise of millennials thinking about retirement.
Read more about how 401(k) plans are adopting pension-like features, including auto-enrollment, that are influencing more millennials to start saving for retirement sooner.