Earlier this year, the National Institute on Retirement Security (NIRS) released a report stating that 90% of millennials participate in an employer-sponsored retirement plan when one is offered. This is great news for PERA employers when it comes to recruiting the next generation of public employees.
Millennials, numbering 83.2 million, are the largest, best educated, and most diverse generation in U.S. history according to the Pew Research Center. And, although many millennials entered the workforce during an economically stressful time, NIRS research shows that they are just as motivated to save as older generations—if not more.
As the report explains, workers who are both offered and eligible for an employer-sponsored retirement plan choose to participate about 95% of the time across all generations. Millennials, with their 94.2% participation rate, are right in line with that average.
Despite their high rate of participation, however, many millennials worry about their retirement security—and for good reason. NIRS notes that nearly half are concerned that they will not be able to retire when they want to, while two-thirds are concerned about outliving their retirement savings.
Furthermore, because many millennials don’t meet the eligibility requirements for their employer-sponsored retirement plans, only about 34.3% of the population actually participate in an employer’s plan.
According to NIRS, “nearly half of millennials that do not participate in an employer-sponsored retirement plan cited part-time work or lack of tenure with their employer as a reason for not participating in a plan, rather than economic reasons such as student debt.”
On the other hand, millennials who work for a PERA employer are automatically starting to save toward retirement—with the option to save even more by contributing to the PERAPlus 401(k) or 457 Plans. These plans require no minimum contribution amount, and vesting is 100% from Day 1.
For those millennials who don’t have access to an employer-sponsored retirement plan, the news isn’t so good. NIRS says that two-thirds of the millennial generation have nothing saved for retirement. Oof.
Millennials have longer tenure in their first jobs than did previous generations.
The NIRS report also debunks the common myth that millennials are loathe to stay in a job for very long. When different generations are compared on the aspect of job tenure, millennials actually spend more time in jobs early in their careers than Generation Xers or Baby Boomers. A study conducted by the U.S. Bureau of Labor Statistics tracking Boomers throughout their work-lives found that Boomers held short tenures with their employers during their younger years. Specifically, it found that, of the jobs that Boomers began when they were 18 to 34, 69% ended in less than a year, and 85% ended in fewer than five years. The NIRS research concludes that “millennials are job-hopping at similar or even lower rates to their Gen X and Boomer predecessors.”
PERA’s hybrid defined benefit plan is beneficial to all generations, but especially to Colorado’s millennial public workforce. Void of the red tape and eligibility requirements that characterize many other employer retirement plans, it’s a strong retirement planning option for a younger generation that does happen to be thinking about their future.