Study: Majority say planning for retirement more difficult than maintaining a diet
WASHINGTON, D.C. – The Insured Retirement Institute (IRI) and the Center for Generational Kinetics (CGK) today released new research focused on the retirement outlook of the Millennial generation that found while 68 percent of Americans aged 20 to 37 said they are saving for retirement, only 29 percent indicated they are actively planning for retirement. The study also found that the majority of Millennials, 60 percent, believe it is more difficult to plan for retirement than to maintain a diet.
“This study debunks the myth that Millennials are not thinking about retirement,” IRI President and CEO Cathy Weatherford said. “At the same time, it confirms what many have believed, Millennials are not doing enough to prepare for retirement. Bottom line, Millennials will need to do more if they want to have a financially secure retirement. It all starts with right-setting expectations, determining a goal, and building a plan to get you there. Given this need, it will be mutually beneficial for financial advisors to engage this market and position themselves as guides who can take Millennials through the process.”
The study explored what Millennials are doing to prepare for their retirement years. Debt reduction was the most frequently cited step Millennials are taking to prepare for retirement, with 77 percent of Millennials trying to reduce their debt. As expected, defined contribution plans will have an important part in generating retirement income for the cohort. Nearly half of Millennials, 48 percent, have a 401(k)-type retirement plan.
Other key findings from the report:
- More than a quarter of Millennials are banking on either winning the lottery or receiving gifted money to fund their retirement years – 15 percent and 11 percent, respectively
- When it comes to expenditures in retirement, 70 percent of Millennials think they will spend less than $36,000 per year – 30 percent less than the current national average, $46,757, for those aged 65 to 74
- The majority of Millennials, 56 percent, believe they will not be able to retire when they want to, with half this group thinking they will never be able to fully retire
- When it comes to working with a financial professional, 62 percent of Millennials would like an advisor to walk them through every step of the retirement planning process, and 87 percent said it is important that an advisor be willing to meet them in person. Only 19 percent of Millennials said they are likely to use a robo-advisor
- About half of Millennials, 48 percent, would pick Warren Buffett to be their financial advisor, and 32 percent would choose Oprah Winfrey. By contrast, 77 percent of Boomers selected Buffett and 15 percent picked Winfrey
- Half of Millennials believe they will be financially supporting their parents as they age
- Millennials are more likely than Boomers and Generation Xers to cut off their children financially at age 18.
- The IRI and CGK study is based on a survey of 1,110 Americans aged 18 to 65, with a 10 percent oversample of Millennials, those aged 20 to 37. The survey was conducted in August 2015. The report was released during VISION: IRI Annual Meeting 2015.
Click HERE to access the study.
About the Insured Retirement Institute
The Insured Retirement Institute (IRI) is the leading association for the retirement income industry. IRI proudly leads a national consumer coalition of more than 30 organizations, and is the only association that represents the entire supply chain of insured retirement strategies. IRI members are the major insurers, asset managers, broker-dealers/distributors, and 150,000 financial professionals. As a not-for-profit organization, IRI provides an objective forum for communication and education, and advocates for the sustainable retirement solutions Americans need to help achieve a secure and dignified retirement. Learn more at www.irionline.org.
About the Center for Generational Kinetics
The Center for Generational Kinetics is the number one Millennials research and strategy firm. The Center’s team of PhD researchers and on-site speakers help companies and organizations solve tough generational challenges with Millennials, iGen and emerging generational trends. Each year The Center works with over 125 clients around the world from car manufacturers and hoteliers to insurance, healthcare and technology. The Center’s team is frequently quoted in the media about the effect of generations on everything from education to retirement. Learn more at www.GenHQ.com.