Millennials represent a major demographic that will shape the workforce for years to come. It makes sense to pay attention to millennial wants and needs in order to advise companies on how to put together benefits packages that will encourage loyalty from younger workers.
Here are some of the things plan sponsors should keep in mind when creating benefits packages.
Millennials are more concerned about student loan debt than retirement
While millennials value a retirement plan (especially one with a match), the reality is they are less focused on retirement than on student loan debt.
According to a recent survey by Student Loan Hero, 61 percent of respondents are concerned that their student loan debt worries are spiraling out of control. On top of that, only 41 percent of millennials are even saving for retirement, according to a study by Wells Fargo. That same study pointed out that 75 percent of millennials with student loan debt consider it “unmanageable.”
When asked about their priorities, millennials often cite paying down student loan debt ahead of saving for retirement.
With that in mind, companies should consider adding a student loan repayment benefit. While there aren’t currently tax benefits associated with providing a student loan payment match to employees, it is nonetheless one effective way to attract millennials to a company. In fact, 87.7 percent of respondents in an IonTuition study said they would consider student loan contribution an important benefit.
Millennials care more about living their desired lifestyle
Interestingly, recent research, like that done by Merrill Lynch Edge, indicates that millennials are actually pretty good savers, contrary to some of the disparaging stories about millennial money habits. The difference is in what they are saving for.
Rather than saving to “leave the workforce” like a majority of Gen Xers and Boomers, millennials are more interested in saving to “live my desired lifestyle.”
Employers need to realize that millennials’ money goals revolve around experiences like travel (81 percent), dining out (65 percent) and improving/maintaining fitness (55 percent). It becomes clear that a benefits package that provides millennials a chance to design their lifestyles can attract younger workers.
Including benefits like flexible time off and flexible work schedules can allow millennials to feel as though they can work their lifestyles around their jobs. It doesn’t even need to be paid time off. While paid time off is desirable, many workers are also happy to have flexible unpaid leave to allow them a little more time away—even if they aren’t compensated for it.
When possible, allowing telecommuting at least two or three times a week can also be a benefit that encourages millennials to join a company. Millennials like the flexibility of working from home or in a coffee shop and perhaps taking a long lunch and making up the hours at the end of the day, or even on the weekend.
Another consideration is adding a physical wellness benefit, such as paying for a gym membership or providing gift cards to meal planning services as bonuses. These small perks help millennials achieve their goals and can win their loyalty.
Millennials want financial planning help at work
A recent study by Schwab found that millennials are interested in investing. However, they would like help understanding their options. In fact, about 80 percent want help figuring out how to allocate the money in their 401k. Additionally, 93 percent of millennials say they’d use a financial wellness program if it was offered at work.
One way to help millennials succeed with their financial goals is to develop a workplace financial wellness program to provide access to planning and investment help. Provide benefits, and then help millennials learn how to manage those benefits to the best effect.
Additionally, a survey by Swell Investing found that 54 percent of millennial investors are interested in socially conscious investing. This makes sense when considering that millennials are focused on a mission when they work for a company, and they like to feel as though they are doing well.
While it might not be practical to add socially responsible investing choices to a retirement plan, for some companies it can make sense to consider adding funds and ETFs that include a measure of social responsibility to the options. On the other hand, there could be fiduciary issues related to adding these funds, so it’s important to be fully aware of the ins and outs.
An alternative to socially responsible investing is to cater to the millennial desire to add meaning to their lives by offering a company volunteer benefit or program.
Millennials are more focused on a holistic approach to money, including an approach that views money as a tool to design a meaningful life. When employers understand this about millennials, it becomes easier to design benefits and packages that help them feel like companies are partners, not just employers.
Jeffrey Roberts is responsible for managing LAMCO’s relationships with plan recordkeeping platforms, managing a portion of LAMCO’s retirement plan clients and assisting with business development efforts.