With October being prime time for all things scary, here’s a new one for you to ponder: 6 in 10 Millennials say they would cash money out of their retirement plans in the event of a large market downturn (in which the major market indices decrease 10% or more).
This spooky finding from the latest Escalent DC Participant Planscape report screams for intervention, seeing as how the Dow Jones Industrial Average is down nearly 20% so far in 2022, the S&P 500 was down 25% as of September from its all-time peak in early January, and the NASDAQ down 32.8% for the year through September.
“These findings underscore the overarching need for increased education and investment guidance, especially as anxiety around market volatility and inflation persist.”
Escalent’s Sonia Davis
“These findings underscore the overarching need for increased education and investment guidance, especially as anxiety around market volatility and inflation persist,” said Sonia Davis, senior product director at Livonia, Mich.-based advisory firm Escalent. “Retirement plan providers and investment managers play a critical role quantifying retirement savings goals, connecting participants with resources to ensure confidence, and ultimately, encouraging them to stay committed to the long game for their personal financial betterment.”
Financial wellness programs have proved instrumental in creating more confidence and retirement readiness, with users citing significantly higher confidence rates in achieving their retirement savings goals. One-third (35%) of financial wellness program users in the Escalent DC Participant Planscape report are extremely confident in their ability to achieve their respective retirement savings goals—double the rate among non-users (17%). Confidence levels are most pronounced among Millennials (42% of users vs. 15% of non-users) and Gen Xers (30% of users vs. 15% of non-users).
Participants are seeking an array of financial wellness offerings, with Gen Xers and 2nd Wave Boomers at the helm. Participants indicate the program options they find most helpful include having access to retirement income planning, Social Security and Medicare advice, a financial advisor, and online access to financial planning tools.
While a large proportion of Millennials are considering pulling out of their retirement in the event of a market downtown, they are also at the helm of exploring new investment options for their portfolio.
Nearly half of Millennials (49%) are extremely interested in investing in ESG inside ESRPs, a notable uptick from 44% last year. More plan participants are also jumping into digital assets, such as cryptocurrency—at 36% of respondents compared to 23% in 2021. Millennials lead the way in the category with 61% investing in crypto.
To learn more about the DC Participant Planscape report, visit escalent.co.
SEE ALSO:
• DC Plan Sponsors Stressed by Underperforming 401ks in Volatile Market
• Millennials Shake Up Vision of Retirement