Retirement might seem like a long time away, especially for young millennial professionals. But if you want to make sure that you have enough cash saved up to live comfortably in your old age then you need to start thinking about it now. Which, quite frankly, is a scary thought.
For decades workplace pensions were seen as the safest and easiest way to save for the future. This model worked pretty well in the ’70s, ’80s and even ’90s. During that time it was common for workers to stay with companies for 10+ years. But that’s no longer the case.
Today, millennials change jobs every couple of years, they make horizontal career moves and they do not follow a set career path. As a result, they are ditching traditional retirement plans for personal savings accounts.
A new study from Broadridge financial solutions and the Center for Generational Kinetics found that millennials are more confident investing their money in a savings account than a workplace retirement plan.
As part of the research, a 25-question survey was administered to more than 1,000 US respondents aged between 22 to 59. These results were then weighted to current US census data for age, region and gender.
The survey asked respondents how confident they were in different ways of investing their money.
While 66% expressed confidence in savings accounts, 58% showed confidence in workplace retirement accounts, 51% in tax-advantaged plans and 42% in real estate.
In contrast, older survey respondents were most likely to trust workplace retirement plans. According to the research, 72% of baby boomers said they were confident in workplace retirement plans and 67% also said they were confident in tax-advantaged plans, while only 57% are confident in savings accounts.
These findings are of particular interest to employers who offer a pension package as part of their employee benefits. Will they still be relevant in the future? Time will tell.