It's no secret that millennials and Gen Z — the 141 million Americans born between 1981 and 2012 — view retirement differently than their peers from previous generations. A
Millennials share a similar story: Their retirement readiness lags far behind Gen X and Baby Boomers. A
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It's hard to blame them. In the past decade, the average student loan balance has
While employers cannot lower real estate prices or student loan costs, there are concrete steps that companies can make to help their Gen Z and millennial employees to be more ready for retirement. With April serving as Financial Literacy Month, now is an opportune moment for financial advisers to guide companies toward helping these groups make the first important steps.
As with everything, it all starts with education. Companies play a crucial role in educating their employees, especially younger staff, about the importance of retirement planning. For many young people, interactions with their colleagues in HR may be the first time they've engaged with the concept of retirement. Employers have the responsibility of guiding those employees toward making smart financial decisions.
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Beyond awareness, companies must foster a culture of financial literacy by integrating retirement planning education into both new hire onboarding and continuous learning programs, ensuring that employees recognize the importance of early and consistent contributions to their retirement accounts. This training can be tailored to meet the specific needs of employees. Gen Z and millennial staff could benefit from personalized advice on topics as diverse as managing student loan debt, climbing the housing ladder, and how to evaluate the investment options available to them within their retirement plan. Younger generations are
401(k) auto-enrollment programs are an increasingly powerful tool for ensuring young people are ready for retirement. A recent study found that
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There was an exciting new capability available to employers as of the beginning of 2024 that they should consider adding to their 401(k) plan: Electing to treat their employees' student loan payments as eligible for the employer's 401(k) match. This means that employees who are unable to participate either in part or fully in their 401(k) as a result of their student loan debt can still benefit from the 401(k) match, helping them to save for retirement while staying on top of their debt.
One of the biggest opportunities for employers lies with staff retention. Retaining the best team members, and keeping them happy, is crucial — and this is especially important for Gen Z and millennial staff. A
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What's good for the employee is great for the employer: Ensuring staff are retirement ready could lead to a more productive team. Talent will become easier to attract and retain, especially so for Gen Z and millennials who place greater value on the broader benefits and values of employers. Senior executives also will want to see a return on the time and money they commit to their HR platforms. Ultimately, creating a robust retirement planning program is an investment in a company's most valuable asset: Its people. This pays dividends in the form of a happy, secure and stable team.
Employers have to adapt to the financial preferences of Gen Z and millennials — not the other way around. By understanding their distinct challenges and views, companies can play a pivotal role in shaping their financial future for the better. Prioritizing financial education, personalized engagement programs and using mechanisms such as 401(k) auto-enrollment, employers can help to alleviate the real financial anxieties these employees face. This will not only help them as they work toward their financial future, but can enhance team morale, talent retention and hiring — a mutual benefit for employer and employee alike.