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Oct. 14 — It’s no secret that millennials tend to be tech savvy and that many expect instant information at their fingertips. Employers should be designing their employee retirement plans with this insight in mind, financial professionals say.
Employers that want to help the younger members of their workforce prepare for retirement often face hurdles. That’s because millennials, those born from 1982 through 2000, often face high debt and steep housing costs. Saving for retirement can be a low priority for many.
Yet, research shows that millennials want their employers to provide retirement planning guidance, Shane Bartling, a senior consultant at Willis Towers Watson in San Francisco, told Bloomberg BNA.
“Millennials are comfortable with and prefer using technology,” such as smartphone apps and larger-screen tablet computers, he said.
Bartling’s thoughts are backed up by survey responses from millennials in Willis Towers 2015/2016 Global Benefits Attitudes Survey—U.S. In that survey, millennials— more so than any other workforce generation surveyed—expressed the importance of convenience, such as payroll deductions, and web-based technology.
Employers can use these insights about technology to help millennials and other employees make better retirement planning decisions, Bartling said.
Joe Goldberg, director of retirement plan services for Buckingham Asset Management in St. Louis, agrees that millennials have a fondness for technology.
“Millennials have a retirement saving mindset.” They know it’s up to them to prepare for their future, he told Bloomberg BNA.
They want quick access to information and want to be able to access everything they need on their phone, he said. Enrollment in a 401(k) plan needs to be simple and fast, Goldberg said. It shouldn’t take more than 15 or 20 seconds on their phone, he added.
Both Goldberg and Bartling agree that millennials aren’t motivated to save for retirement merely by projections as to how much money they will have 40 years down the road.
These employees are more likely to make plan contributions if employers can demonstrate that added payroll deductions won’t significantly impede their ability to pay ongoing expenses, Goldberg said. With this in mind, it’s helpful to show millennials that the tax benefit derived from plan contributions will soften the blow of those contributions.
For example, if an employee is in a 30 percent federal income tax bracket, an employer can show them that for every dollar they contribute to their 401(k) plan, their disposable income is reduced by only 70 cents, he said.
Bartling said his firm has taken another route to motivate millennials.
Willis Towers developed a web-based technology that can help millennials take retirement planning more seriously, he said. The tool uses metrics to show employees how well they are progressing toward their “age of financial independence.” It permits employees to plug in numbers, such as hypothetical contribution amounts and investment allocations, to view how such changes would alter this projected date, Bartling said.
The result is often a powerful emotional experience that can spur employees to focus on their retirement planning needs, he said. When employers combine such tools by giving their employees face-to-face communication with financial advisers, either in group seminars or one-to-one meetings, employers can build a lot of trust with their employees. he said.
The information that millennials glean promotes clarity without any judgment and makes it easier for them to act, Bartling said.
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