According to a new study from ADP Research Institute, millennials need to start significantly saving for retirement. The study examined information from 9 million U.S. employees ages 20 to 69. The results showed that 60% of employees were saving for retirement in a workplace plan, and they were able to save an average of 6.7% of their income. But looking into this number further suggests that millennials need to focus more on their retirement. Only 48% of employees ages 20-29 saved in a workplace retirement plan. Compared to the 64.4% of ages 61-69 that saved and the 65.6% of ages 50-59 that saved, the 48% is significantly lower. In addition, those aged 20-29 only put an average of 4.9% of their income, while others put up to 9.2%.
Chris Augelli, vice president of product marketing and business development at ADP Retirement Services, says, “ We certainly see a need to engage younger generations earlier in the process.” He goes on to say that employees realize that they need to save for retirement at later ages, but they lose out on the advantage of time and compounding interest by this point. If millennials continue to wait to save, they may end up with a lot less money when it comes time to retire.
So, if you are a millennial, now is the time to sign up for a 401(k) and boost your savings rate!