It’s difficult to say things for certain about Generation Y’s financial planning, as many of them are just getting going. Retirement planning — which for nearly all of Gen Y will mean saving through a defined contribution plan — is not always front of mind.
This makes communication with this age group is crucial. Kelly Minnick, a senior consultant in marketing for retirement with OneAmerica, says “it’s important to talk to younger plan participants about more than just retirement-specific topics, because retirement may seem like this really intangible idea to them. I think that it’s really important to communicate with them in a way that resonates with them,” Minnick says.
As a Gen Yer herself, who currently is deferring about 10% to her retirement plan, Minnick says, “I like to have a lot of my education in an on-demand, self-serve kind of way, so I can go and get it when it’s convenient for me.”
“Mary”, 29, is a Washington, D.C.-based senior associate with a national retail chain who requested anonymity. Although she has an MBA from the University of Virginia and has met with a financial adviser, she tells EBN she is “not very” confident that she will be able to live comfortably throughout retirement and “not at all” confident that she is doing enough to prepare, in part because of her employer’s benefit offering.
“They offer a 401(k) plan with minimal contribution and I am not eligible for one year,” she says, as she currently has nine months tenure with her employer. “I plan to eventually enroll, but I will weigh my outside options before joining, given the minimal contribution my employer makes. Becoming more fiscally responsible is one of my goals for this year. Having recently finished grad school and started paying student loans, plus starting a new job, I am allowing myself a few months to sort out a reasonable budget and savings plan. However, I do feel behind in my planning and it stresses me out.”
On the other hand, Bradley Portnoy, a 26-year-old Brown University graduate and director of digital at Weber Shandwick in San Francisco, says he is contributing 6% to his 401(k) and getting an employer match. “They provide a lot of reminders, but don’t automatically opt us in,” says Portnoy, who adds he is “somewhat” confident in his retirement savings.
“I have an accountant and a financial adviser, but that's largely because they’re my parents’ accountant and adviser,” he says. “My employer offers an automatic 401(k) optimizer that I believe uses a real person at JP Morgan; I was skeptical, but when I started using it I got much better returns.
“I’m trying to set myself up with a good base to save for retirement, without letting it be a huge concern at this point. I want to make sure that I’ve got the basics — like a 401(k) — covered, and when I have a bit more flexibility in my budget I can think about contributing more.”
Portnoy believes his confidence in his retirement preparation is around average. One thing he definitely has in common with others in his age group — he thinks he’ll be retiring later, leaving him with another 40-plus years in the workforce.
“I’m not sure when I’ll retire, but I know that it will likely be in my 70s rather than my 60s,” he says. “If medical technology advances enough, perhaps I'll never retire!”
Read EBN May for full coverage on Gen Y’s retirement planning.
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