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Money Matters and the Millennial Mindset

Robin Loos, CEBSUS Benefits LeadWoodHouston, Texas

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Agenda• Defining Millennials• Spending and Saving Habits• Retirement Readiness• Plan Design Features

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Defining Generations

Baby Boomer Generation X Millennials Gen Z

1946-1964 1965-1980 1981-1996 1997 and later

Pew Research Centerhttps://www.pewresearch.org/fact-tank/2018/04/11/millennials-largest-generation-us-labor-force/ft_18-04-02_generationsdefined2017_working-age/

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Millennial Crisis

Dot.com Bubble 9/11 Energy

CrisisMortgage

CrisisAutomotive

Crisis

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Student Loan Crisis

Year <30 30-39 40-49 50-59 60+2013 $ 362.0 $ 354.1 $ 188.1 $ 124.9 $ 49.82014 $ 370.5 $ 383.1 $ 207.6 $ 136.5 $ 57.72015 $ 376.4 $ 408.4 $ 229.6 $ 149.7 $ 66.72016 $ 383.2 $ 437.4 $ 255.6 $ 163.2 $ 76.32017 $ 383.8 $ 461.0 $ 279.9 $ 177.2 $ 85.4

$ 1.5 Trillion in Student Loan Debt

https://www.forbes.com/sites/zackfriedman/2019/02/25/student-loan-debt-statistics-2019/#7accefeb133f

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Millennial Spending

$600 BillionAnnually

$1.4 TrillionAnnually

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Millennial Saving

70%

Less than $ 5,000

58%Savings Accounts

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Retirement Readiness

• 34% Participate at Work

• 2/3 Have Nothing Saved

• 5% Saving Accurately

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Retirement Plan Design• Eligibility Rules• Automatic Features• Contribution Formula• Vesting Schedules

• Investments• Plan Leakage• Financial Literacy• Student Loans

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Eligibility Rules• Hours requirement limit part-time workers• Elapsed time competes with turn over

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Automatic Features• Default employees into the plan• Select quality Target Date Funds• Increase deferral rates tied to merit increases

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Market Competitive Contribution• Matching formula sets the deferral “anchor”

38%

31%

21%

10%

Traditional Stretch Tiered Other

https://www.plansponsor.com/research/2018-dc-survey-plan-benchmarking/2/

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Vesting Schedules

2

7

11

Millennial

Gen X

Baby Boomer

Average Tenure

https://www.forbes.com/sites/sarahlandrum/2018/01/12/millennials-to-be-the-most-high-maintenance-in-the-workplace/#76cab67423ca

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Investments• Target Date vs. Balanced Funds• Socially Responsible Investments• Brokerage Windows• Fee Transparency

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Plan Leakage• Loan Limitations• Hardship Withdrawals• Distribution vs. Rollover

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Financial Wellness• Emphasis on financial literacy• Programs targeting basic saving principles• Promote compounding interest

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Tax Diversification• Roth Contributions

– Double dipped savings• HSA

– Triple tax threat

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Student Loans• IRS Private Letter Ruling• Congressional Considerations

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Communications• Generation based targeted messages• Variety of media channels• Timely, relevant information

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Gig Economy• 16% of workers have access to retirement plans• Work longer to transition to retirement• Plan alternatives changing the retirement

discussion

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Generation Based Decisions• Benefits the workforce, not only targeted groups• Advances retirement readiness across the board• Setting up Gen Z

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Key Takeaways• Millennials have unique spending and saving

habits with more risk aversion than prior generations

• Plan design should balance access, education, vesting, and investing

• Plan features for millennials advance overall retirement readiness for the entire workforce

• We’re all millennials now!

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