Though retirement plan participation rates across all age groups correlate to earnings, Millennials at all income levels are most likely to want to save and to support auto-enrollment plan features, according to a new survey.
T. Rowe Price conducted an online survey of 3,026 working adults who have 401(k) plans, also reaching out to 255 additional Millennials who are eligible to participate in an employer-based DC plan but have chosen not to. For nearly all workers, income correlated to their willingness to contribute to a 401(k) plan; among Millennials, the average earnings of savers ($57,000) was more than double that of non-savers ($28,000).
Income Equals Participation
Among Millennials, 38% of respondents saying they got a bump in pay of 5% or more over the past 12 months, compared with just 15% of Baby Boomers and 28% of Generation Xers. However, just 22% of Millennials who aren’t contributing to their 401(k) got a raise of that size. In addition, 49% of Millennials who have a 401(k) plan reported having no student loan debt, compared with just 34% of Millennials who aren’t in a plan.
In addition, 43% of Millennials who are not contributing to their plans report being “much worse off” or “somewhat worse off” financially than their parents were at their age, compared with 28% of those who are contributing.
The survey also reported a noticeable gender gap in plan participation — women made up 41% of Millennials who reported being active in their 401(k) plan and 68% of those who said they did not participate in a plan. Across all age groups, the median balance in the 401(k) accounts of men was twice as much as the accounts of women ($22,000 to $11,000).
Millennials were also the most likely to say they would increase their DC plan contributions if they got a raise, with 61% of that age cohort saying they would, compared with 40% of Baby Boomers. Four in 10 Millennials also said they had increased their 401(k) contribution amounts over the past year, compared with 21% of Boomers.
Mixed Messages on Auto-Enrollment
The survey also gives further credence to the idea that there is a lot of unmet interest in auto-enrollment features. While 80% of Millennials who are automatically enrolled in plans said they wanted their contribution to be high enough to fully cover the employer match, just 15% of Millennials reported having an auto-enrollment feature in the first place.
In addition, the range at which respondents said they would opt out was scattered; 31% of all workers said they wouldn’t opt out until the rate reached 10% or higher, but another 42% said they would opt out at a contribution rate of just 5% or less.
To view the full survey results, click here.
