The good news: More than 80% of Millennials are currently saving for retirement. The bad news: More than 60% are saving at inadequate levels. Those findings are from a new survey by Pentegra Retirement Services.
Of the Millennials who are saving, 37% are contributing at least 5% of their salary into a retirement savings vehicle, but 45% are saving under 5% and approximately 18% are not saving at all, yielding a total of nearly 63% who are saving inadequately, according to Pentegra.
The report points to the “$152,000 cup of coffee” as one culprit — that is, purchasing a $5 coffee daily can ultimately result in $152,000 in lost savings over the course of a career.
“While it is encouraging that over 80 percent of millennials surveyed are saving something for retirement, it is troubling that a large portion are saving less than five percent, and some not at all. This is what we want millennials to really think about. How are you spending your money?” explained Rich Rausser, Senior Vice President for Pentegra.
Saving for retirement is an important factor for Millennials when looking for a new job, as 78% of respondents said they look for a company that provides retirement benefits. However, when it comes to ranking priorities, saving for retirement was second to paying a mortgage, just slightly ahead of paying a car loan in third place. Paying down a student loan was fourth, according to the findings.
Based partially on personal interviews, the survey finds that many Millennials first learn about retirement saving from their employers and blame a lack of knowledge of the subject on the purported absence of an educational curriculum while growing up.
To encourage Millennials to be more proactive in saving for retirement, Pentegra recommends:
- redoubling efforts at educating employees;
- encouraging conversations about saving for retirement with family, friends and peers;
- improving economic education at schools; and
- delaying instant gratification.
The survey and interviews were conducted in May 2017 with a cross-section of more than 100 Millennials across a diverse set of careers and income levels.
