Millennials and retirement: What do employers need to know?

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By Casey B. Baldwin, Craig Glyde, Sarah Murray | 15 August 2019

Millennials became the largest represented generation in the U.S. labor force in 2016. They now stand at about 35% of the workforce1 and that percentage is growing at a rapid pace. Yet due to issues like unstable work, debt, and coming of age during the global financial crisis of 2007-2010, concern about the retirement savings of Millennials abounds.

While some of the research surrounding Millennials predicts a difficult financial future, many statistics show that this generation’s retirement risks may not be so different from older generations. In fact, many complexities surround the financial wants and needs of Millennials. Employers may benefit from learning more about this generation's changing relationship with retirement planning.

Who are Millennials?

While there is no exact start and end date, Millennials are generally considered to be those born between the early 1980s and mid-1990s. As of 2019, Millennials are roughly 23 to 38 years old. Due to their early use of the internet, Millennials—or “digital natives”—are also usually tech savvy.

Another interesting characteristic of Millennials is that they are more likely to discuss retirement with friends, indicating that this generation has built a culture of increased transparency regarding money. Despite entering the workforce during a turbulent financial period, many Millennials actually started saving for retirement at a younger age than previous generations.2  

Today’s shifting concepts of retirement

Retirement in the United States has typically been characterized as a “three-legged stool” composed of personal savings, Social Security, and employer-provided retirement. Yet Americans are now living longer than ever before, and there is more pressure to use personal savings in retirement. In fact, Millennials expect to be more responsible for their own retirement income in comparison to previous generations because of concerns that two of the three legs of the stool—Social Security and employer-provided retirement—will be reduced.

Therefore, a more realistic model for today’s retirement plan may be a four-legged stool. In this model, the fourth source of income is working through retirement. It’s becoming increasingly common: Many Millennials have seen their Baby Boomer parents forced to work into old age. Still, according to the 19th Annual Transamerica Retirement Survey of workers, nearly one in five Millennials expect work to be their primary source of income.3 That’s double the number of Boomers.

More than half of those Millennials surveyed also expect their primary source of retirement income to be self-funded through retirement savings accounts. Furthermore, only 19% of Millennials are counting on Social Security to be their primary source of income, compared to 42% of Boomers. Overall, Millennials seem to understand the problems they’re up against in regards to retirement.4  

What Millennials want and expect from retirement

There’s a lot of conjecture about what changes Millennials wish to see during their lifetimes. What does this generation hope for in regard to retirement savings, though? To begin with, access to a retirement plan ranks high on Millennials’ list of “wants.” Moreover, according to the Transamerica survey, many indicate that a good (or better) retirement plan would be a sufficient reason to change jobs.

This generation also demonstrates an understanding of the importance of saving for retirement, and expects their retirement to be primarily self-funded. About half of Millennials report that they contribute to an employer’s Roth 401(k). In fact, the majority of those who are aware that their employers offer a Roth 401(k) option contribute to it. The number of Millennials contributing are higher than both Gen Xers and Boomers.

Millennials also report that they’re hungry for information, education, and advice from employers on how to achieve their retirement goals. This need for knowledge is confirmed through the data: a small but notable number of Millennials say they’re unsure how their retirement savings are invested at all.5  

Further statistics regarding Millennials and retirement

More troubling statistics do exist. For instance, a 2018 survey from the National Institute on Retirement Security (NIRS) titled, “Millennials and Retirement: Already Falling Short,” found that 66% of Millennials have nothing saved for retirement. They also found that only 5% are saving adequately for retirement based on the current standard recommendation by financial experts. (This recommendation is designated as 15% or more of one’s salary, up from roughly 10% in recent years.) According to this same survey, for the one-third of Millennials who are saving, the average balance was nearly $68,000, but the median was just over $19,000.6 That data suggests that there is a small segment of Millennials doing the bulk of the saving.

Yet it’s important to consider that this survey included participants as young as 21. Because it’s less common for people in their early 20s to begin saving for retirement, the numbers may not be as drastic as they appear. There are also significant differences when the survey is controlled for race, gender, and education as well as for profession and industry.7

The potential need for more employer-provided retirement plans

According to the same survey from NIRS, over one-quarter of Millennials don’t have access to employer-provided retirement plans. This makes saving difficult in general—and it means that they are also losing out on any potential match from an employer. A further 30% work jobs that offer retirement plans for which they haven’t yet met the eligibility requirements. This statistic likely relates to more Millennials having to work part-time. And while it’s true that Millennials are job hopping, they are not changing jobs any more than other generations did when they were the same age.

The remaining number of survey participants represent those who have access to and are eligible to participate in an employer-provided retirement plan. Of that group, the vast majority are contributing while only a very small group is not. Through this data one can conclude that, when Millennials have access and are eligible, they are very likely to take advantage of these plans.8

Financial priorities of Millennials

In the Transamerica survey, participants were asked to identify their single greatest financial priorities. The results? Only a small percentage of Millennials checked the box for retirement savings.

So what are the financial priorities of Millennials? To begin with, basic living expenses are this generation’s foremost concern, followed by building personal savings, paying off credit card debt, and supporting children, which are all given precedence over saving for retirement. Beyond these main financial priorities, other smaller but still substantive concerns include mortgage, student loans, and healthcare expenses. Of course, many of these priorities speak to what stage of life Millennials are in rather than what generation they are. Still, the results help illuminate the current financial worries of Millennials.9

Millennials’ goals and expectations for retirement

According to the Transamerica survey, this generation’s goals and expectations for retirement are creating new norms. For one, more than half of Millennials expect to retire no later than age 65. Fewer Boomers and Gen Xers expect the same. But the generations are of like mind when it comes to transitioning to retirement. Nearly half of Millennials, Boomers, and Gen Xers all hope to slowly transition into retirement.

Additionally, 12% of Millennials expect to retire at a specific age, compared to 19% of Boomers and 11% of Gen Xers. In regard to those expecting to retire only when they have enough money saved, the numbers between Millennials, Boomers, and Gen Xers are similarly small.10  

The need for increased education

Participants were also asked how much money they think they’ll need to save in order to be financially secure in retirement. For Millennials, the median estimate was $400,000. Yet, a recent Milliman report estimated that a healthy 65-year-old couple who retires in 2019 can expect to pay $369,000 in today’s dollars over their lifetime for healthcare alone.11 The comparison may feel like cause for alarm, but a lack of information and resources may have contributed to Millennials’ estimates. Surprisingly, almost half of Millennials actually just guessed at how much they’ll need. Some made their estimations based on their current living expenses. And only a small percentage used a calculator or spreadsheet. The takeaway? Just like generations before them, Millennials need more information regarding retirement planning.

Luckily, Millennials are generally more willing to discuss retirement than older generations as well as admit to their lack of education on the subject. In fact, nearly three-fourths of participants think they should know more about their investments. More than half of those surveyed admit that they’re procrastinating when it comes to retirement planning. Although this number highlights the need for increased financial awareness, it’s important to note that putting off retirement planning is not unique to Millennials.

Actions employers can take that may benefit Millennials

Figuring out how to save for retirement may be the biggest obstacle that Millennials face. People young and old often find financial planning to be overwhelming. So how can the process become less convoluted? For starters, many Millennials are hoping that their employers might make the process of saving for retirement clearer.

According to Transamerica, the majority of Millennials surveyed report that automatic enrollment into a retirement plan is very or somewhat appealing. Furthermore, most Millennials are very or somewhat likely to use automatic escalation features. This generation is also more likely to contribute to a Roth 401(k). In fact, nearly 75% of those aware of a Roth feature from their employer choose to use it.12  

Other actions employers can consider include expanding the default contribution rate to 10%,13 which is the median rate supported by Millennials. Additionally, employers may wish to consider the following options: reducing eligibility waiting periods, structuring matching contributions to promote higher salary deferrals, providing accessible and easy-to-understand retirement education, offering assistance in planning for transition into retirement, and creating opportunities for phased retirement. These actions can benefit all generations, not just Millennials.

Employers should also take note of recent legislative activity that has attempted to address some of the issues discussed above. For example, if the Setting Every Community Up for Retirement Enhancement (SECURE) Act is signed into law, more part-time workers would have the opportunity to participate in 401(k) plans and the auto-enrollment safe harbor contribution cap would increase.


Aware of the challenges they face, Millennials want to take control of their financial futures and hope that their employers can offer assistance. Though they may encounter distinct financial issues in comparison to previous generations, ultimately their needs aren’t so different. Like the Gen Xers and Boomers before them, Millennials just want to be ready when retirement age rolls around.

1Fry, R. (April 11, 2018). Millennials are the largest generation in the U.S. labor force. Pew Research Center. Retrieved August 14, 2019, from

2Transamerica Center for Retirement Studies. 19th Annual Transamerica Retirement Survey. Retrieved August 14, 2019, from




6Brown, J.E. (February 2018). Millennials and Retirement: Already Falling Short. National Institute on Retirement Security. Retrieved August 14, 2019, from



919th Annual Transamerica Retirement Survey, op cit.


11Schmidt, Robert (July 2019). Retiree Health Cost Estimates. Milliman White Paper. Retrieved August 14, 2019, from

1219th Annual Transamerica Retirement Survey, op cit.



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