Dear Business Owner,
It’s Valentine’s Day, and retirement plan advisors and plan sponsors can play Cupid with millennial employees and a company’s 401k.
Millennials have the expectation that they will retire early, and they also believe that Social Security will not be available to them.
According to the Transamerica Center for Retirement Studies (TCRS), the median amount that a millennial contributes to their 401k is 8 percent and over 70 percent of millennials already started saving for retirement with the average starting at 22.
Millennials are also willing to leave a job for another simply because it offers a better 401k plan solution.
With this in mind, it is extremely important to make sure that you’re offering a 401k plan that is more than just a pretty card or a box of chocolates.
For plan advisors and plan sponsors, you want to make your prospective and current employees fall in love with your 401k plan and offerings.
What we like
Here’s what this millennial asks when it comes to assessing her retirement plan:
- Are you offering a 401k Match?
According to TRCS, the maximum match for the average 401k plan is 3 percent of the employee’s salary. In fact, in 2018 Fidelity provided a 100 percent match up to 7 percent of their employee’s salary. When a millennial is comparing the different plans that are being offered to them, they will typically go with the higher match. If you aren’t hitting the maximum match as an employer are you at least adding other benefits, such as being a 3(38) fiduciary?
- Are you a 3(38) Fiduciary?
You may be the expert in your field, but you probably aren’t the expert in managing a portfolio. Millennials are ones to do their research, especially when 65 percent plan on retiring when they are 65 years old or younger. If you have a 3(38) fiduciary, millennials are more likely to choose your plan and your company because they feel someone who knows how to properly make investment decisions is the one in charge of their plan. I currently work at Shelton Capital Management, which is a 3(38) fiduciary, and one of the reasons I chose the job.
- Do you offer the funds we care about?
For the past 10 years, the NASDAQ has outperformed the S&P 500 Index by over 240 percent. The NASDAQ also has the companies that millennials care about: Google, Apple, Amazon, etc. Make sure that you’re offering a selection that millennials can get on board with, it may increase your job applicants and loyalty.
- Automation?
Nothing bugs millennials more than having to manually take out money from their paycheck for 401k contributions, bills, or subscription-based products, they just want it done automatically. Offering automatic enrollment with your 401k plan not only brings you into the 21st century but makes your plan more appealing to your employees.
Offering items as simple as the ones listed above can make your 401k plan that much more appealing to millennials and boost your employee retention rate.
Moving forward the people you will be employing will be millennials, so it’s important to update your 401k plan to create a want-to-work-for company.
Sincerely,
Amanda the Millennial
Amanda Roesser is a marketing specialist with Shelton Capital Management.
Ashley Roesser is the Manager of Digital Marketing and Campaigns at Nintex. She has targeting both B2B and B2C audiences. She is currently in charge of managing paid marketing programs and demand generation infrastructure.
