Why Two-Thirds of Millennials Have $0 Saved for Retirement

April 10, 2018

According to a February 2018 report from the National Institute on Retirement Security, two-thirds of today’s working millennials have $0 saved for retirement. You read that right; 66.2% of Americans between the ages of 21 to 32 have nothing saved for retirement.

Naturally, this news is unsettling to us here at The Dime. Born under the roof of Colorado PERA, our mission is to ensure the retirement security of hundreds of thousands of public employees across Colorado—and particularly our fellow millennial members.

That got us thinking:

What are the barriers young people face when it comes to retirement planning?


What can be done to eliminateas much as possible, anyway—whatever is hindering millennials from saving for their future?

While it’s easy to set aside concerns about something 40+ years down the road, here’s the thing: By some experts’ estimations, millennials will have to make pre-tax retirement plan contributions of 15% to 22% of their salary starting in their 20s if they’re to try to ensure some semblance of a secure retirement—a savings goal that would be an uphill battle for almost anyone.

As we dug further into the research, we found that there isn’t just a single barrier keeping millennials from saving; instead, there are three interconnected factors that, taken together, contribute to the difficulty this generation faces in planning for retirement: 

  1. Eligibility for Employer-Sponsored Retirement Plans. After Social Security, employer-sponsored retirement plans remain the most important vehicle for providing retirement income. As of 2014, 66.2% of working millennials have access to a retirement plan through their employer. Yet surprisingly, only a little more than half of that number (34.3%) actually participate in such a plan. The reason for this is due to eligibility requirements, as only 55% of those with access to a retirement plan actually meet their employer’s criteria for participation, such as tenure with the organization or number of hours worked (otherwise known as the eligibility computation period, or ECP).
  1. Higher Rate of Part-Time Employment. Millennials are employed on a part-time basis at a larger rate than other age groups. In fact, as of 2014, the rate of part-time employment for millennials—25.1%—is close to double the rates for older generations. Many attribute this number to the rise of the “gig economy” and/or the fact that millennials entered the workforce during the worst recession in modern history, which limited the full-time opportunities they might expect to have in a stronger economy.
  1. Shorter Tenure With Current Employer. Being relatively new to the workforce, millennials may not have been with their current employer long enough to be granted access to a retirement plan—as of 2014, a little over half of millennials have been with their employer for one year or less. Many employers set time thresholds (such as hours worked or overall time with the organization) before employees gain eligibility.

These numbers don’t exactly paint an optimistic picture, but the silver lining in all of this is that when millennials have access to and are eligible for an employer-sponsored plan, the rate of their participation is extremely high—we’re talking about 94.6% on average. So millennials WANT to save for retirement…they just need to be given the opportunity to do so. Fortunately, Colorado PERA is here to help. In our next post, we’ll look at some of potential ways to carve a clearer path to help them get there.

*The numbers in this post were pulled from the National Institute on Retirement Security’s February 2018 report cited previously. The report is based on the author’s analysis of the 2014 Survey of Income and Program Participation (SIPP) data from the U.S. Census Bureau, and examines the distinct challenges posed by the current retirement system in America for working millennials between the ages of 21 to 32. Click here for further information.