New research by the National Institute on Retirement Security (NIRS) found 66.2 percent of Millennials have nothing saved for retirement. Of those who are saving, just five percent are putting away enough.
Millennials and Retirement: Already Falling Short examined working individuals born between 1981 and 1991 for the study.
Findings were even more worrisome among Latino Millennials, as 83 percent have yet to save anything for retirement.
Considering the challenges this generation has faced and will face, their retirement outlook isn’t exactly shocking. The report mentions the strain of “enter[ing] the workforce at a time of depressed wages, high levels of unemployment and major structural changes in the American economy”—a list of detriments that is far from comprehensive.
While two-thirds of Millennial employers do offer a retirement plan, only 34.3 percent of Millennial workers participate. However, it’s important to note that four in 10 don’t qualify. The percentage of participants jumps to 90 when exclusively considering those who are eligible.
Again troubling is the racial and ethnic gap among Millennials contributing to employer-sponsored retirement plans. Only 19.1 percent of Latinos and 22.5 percent of Latinas are participating, while 41.4 percent of Asian men and 40.3 percent of white women are saving.
“With their increased life expectancy, lower income replacement from Social Security, and a lower likelihood of having a traditional defined benefit pension, this generation will need to save significantly more than previous generations in order to maintain their lifestyle during retirement,” explained Jennifer Brown, NIRS manager of research and author of the report.
“In fact, recommendations from many financial experts indicate that Millennials will need to put aside 15 to 22 percent of their salary—which is double the recommendation made to previous generations.”
Ultimately, the National Institute outlines seven steps to help improve the retirement outlook for Millennials:
- Expand defined contribution plan eligibility for part-time workers
- Reduce waiting periods for workers to become eligible to participate in a retirement plan
- Increase auto enrollment
- Increase employer matches and default contribution rates
- Provide education to increase awareness of the benefits of employer matches
- Promote and educate Millennials about the Savers’ Credit
- Protect and strengthen Social Security