It depends on who you ask.
Have you ever tried to imagine something that seems impossible, or that you have never seen before? It is retirement for many of the millennial generation.
Millennials represent the largest proportion of the American workforce today. Indeed, according to a recent Brooking Institute report, nearly 40% of employees are between 22 and 38 years old. And, in addition to numbers, millennials bring more gender, ethnicity, and racial diversity to our workforce than previous generations.
For many millennials, the idea of ââretirement may seem too distant to require any real thought or consideration. And for some, especially African Americans, Latin Americans, and first-generation Americans, the concept of retirement may be something entirely new.
Armed with this knowledge, how can employers ensure that this increasingly diverse segment of the workforce is supported, engaged and invested in its journey to long-term financial well-being?
1. See things from their point of view.
Millennials focus on the here and now. The median amount of debt among millennials is almost 50% higher than the previous generation, according to a Pew Research Centerreport. The rising cost of education, as well as coming of age during the last financial crisis, has created a difficult financial reality for this generation.
As a result, millennials expect to do a lot of things that previous generations did at the same age, including buying a home, starting a family, and – you guessed it – saving for retirement.
In fact, a recent report from Federal Reserve Bank shows that only 42% of families under 35 have retirement savings accounts and only 5% of these families are saving enough for retirement according to the standard recommendation of financial experts.
2. Take a closer look.
The millennial generation is incredibly diverse with around 44% of millennials identifying themselves as a racial or ethnic minority, according to the Brookings Institute. In addition, there are more women than ever in the workforce. The growing diversity within the workforce brings a new range of experiences and ideas, and also requires attention to the challenges and vulnerabilities facing certain groups.
For example, a 2019 McKinsey & Company report shows that millennials of color often face more economic challenges than non-minorities. The report also shows that minority families with a college education see significantly less generational wealth (only 8% report an inheritance), and that financial support from parents and extended family weighs much more heavily on the potential wealth of graduates. minority colleges. In addition, according to a recent SmartAsset report, data shows that only a third of African American families and Latin American families have retirement savings accounts.
3. Take action.
Delaying retirement savings isn’t unique to millennials. However, millennials face unique financial and social barriers to financial well-being and retirement planning. Armed with this knowledge, there are a number of strategic and inclusive actions employers can take to help engage their entire employee population and ensure no one is left behind:
Take a human-centered approach. A human-centered approach is a holistic approach. He looks at the whole person, not just what’s in his bank account. We understand that general well-being requires attention to our mental, physical and financial health, but also to our sense of social well-being and belonging.
Therefore, a holistic approach to financial well-being includes the recognition of possible social, psychological and / or logistical barriers to saving. Providing pension plans, financial counseling services, and student loan programs are all integral to financial wellness programs.
However, employers must first help employees envision a healthy financial future for themselves. Only then can we ask millennials to become engaged and actively involved in financial wellness and retirement planning.
Create targeted communications. Millennials seek information, education and advice from employers on how to achieve financial well-being and save for retirement. Communications dealing with the unique financial issues that millennials face are more likely to resonate and promote engagement. In addition, a recent Transamerica Retreat A survey showed that while 55% of millennials understand basic financial concepts, only a quarter are truly financially literate.
Targeted communications should be used to educate employees about employer-sponsored plans available to them and to help employees understand the tax benefits, employer contributions, and investment opportunities that your pension plans offer.
Increase points of contact. Frequent and diverse points of contact are essential to increase understanding and encourage engagement. Traditional electronic communications that are accessible from anywhere and anytime are important and necessary for today’s workplace. However, traditional communications may not allow all employees to thoroughly explore offerings and understand how plans can help meet their personal challenges or goals.
Millennials are hungry to learn more about financial wellness, but many may not know where to start. Providing a greater variety of potential touchpoints such as live on-site information sessions or individual options, in addition to traditional messaging, will allow employees to engage in ways appropriate to their comfort level, their needs. preferences and general needs.
Re-evaluate the design of your pension plan. Employers are willing to re-evaluate plan design based on the needs of their organizations and employees, recent study finds loyalty plan sponsor study. In fact, 75% of employers said they made changes to their pension plan design or investment menu in the past two years.
The main changes were the increase in the employer matching contribution or the addition of a matching contribution. Employers could also consider adding automatic enrollment and increasing the default contribution rate. Adding an âequivalentâ contribution to the student loan repayment may also be a viable option for some employers.
Supporting the overall financial well-being and retirement readiness of your workforce isn’t just an investment in your people, it’s an investment in the future of your organization. As the competition for diverse, high-performing talent increases, employers who are attentive to the unique needs of their employees are better able to engage employees in all areas of working life, thereby improving recruitment. , retention and overall business performance.
Uche Enemchukwu is a Benefits Lawyer and Strategy Consultant at Nelu Diversified Consulting Solutions. She has extensive experience advising Fortune 100 employers as well as small and medium-sized businesses on compliance with the Internal Revenue Code, ERISA, PPACA, HIPAA, COBRA and various other benefit plan laws. She began her career as a partner in a large law firm with a reputable and sophisticated human capital and benefits practice, then moved to consulting at Willis Towers Watson, where she worked. Led employee benefits compliance and strategic outcomes for large global employers. She now manages compliance for the largest 401 (k) plan and the largest existing pension trust. Uche is a âhighly ratedâ SHRM speaker and is active in the American Benefits Council and the American Bar Association. She received her JD from Washington University at St. Louis School of Law and an LL.M. in Taxation from the same institution. She received her BA in History and Comparative Area Studies from Duke University.