Maybe they know a thing or two after all. In 2014, 64 percent more workforce Millennials started contributing to a 401(k) account when compared to 2013. It’s a major reason that 78 percent of active 401(k) participants who made a change to their plan made a positive one, by either starting or increasing their contributions.
Overall, compared to 2013, the number of participants who contributed to their 401(k) account increased by 18 percent, according to the latest Bank of America Merrill Lynch 401(k) Wellness Scorecard.
“As lack of retirement savings continues to make headlines, it is encouraging to see more people taking advantage of employer-offered financial benefits in preparation of their financial future,” David Tyrie, head of retirement and personal wealth solutions for Bank of America Merrill Lynch, said in a statement. “Employers play an important role, and intuitive plan design strategies can make decision-making about enrollment, levels of contribution rates and investment choices even easier for employees.”
Employees responding to simplified design and automated features
With employers increasingly embracing the opportunity to help employees make more informed financial decisions, plan sponsors are looking to streamline and simplify the enrollment process. Examples of simplification that lead to 401(k) participation growth include:
- During 2014, 64 percent of 401(k) plans combined auto enrollment and auto increase, representing a 25 percent increase compared to one year earlier.
- As a result of these automatic features, this past year saw 32 percent higher 401(k) participation growth for plans offering auto enrollment, and 46 percent more employees scheduling automatic increases.
- BofA continues to see a strong correlation between increasing retirement contributions and annual health care enrollment. In the second half of 2014, the report found a 104 percent increase in positive actions among new enrollees in comparison to the first half of the year, and a 98 percent increase in positive actions during the same time period.
Increasing interest in tools and resources to manage financial lives
Trends revealed throughout this report are consistent with insights garnered from Bank of America Merrill Lynch’s recent Workplace Benefits Report, which found the overwhelming majority of employers (83 percent) feel a sense of responsibility for employees’ financial wellness and are tailoring financial education offerings to better meet the needs of their employees.
Employees are taking more advantage of the financial education that is being offered to them. Meetings with educational specialists increased by 14 percent year over year, and
This semiannual report reveals trends in the behaviors of 2.5 million employees at companies with financial benefit plans serviced by Bank of America Merrill Lynch.
See Also:
- Half of Millennials Want to Retire as Soon as They Can Afford It —And Think They Will
- Over 80% of Gen Zers and Millennials Seek Financial Advice
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
