Some encouraging stats from this article indicate that a full 91% of millennials with jobs earning at least $50k contribute to their employer’s 401k plan. Since this is essentially free money, I was shocked to think that 9% don’t. What is even more shocking is at that age and demographic, only 40% of Baby Boomers were contributing to their 401k!
I think there is a couple things going on here that might explain this situation. The article touches on one of them, and that’s that this generation has lived through 2 big economic crashes which leaves a lasting impression on individuals just entering the job market. Watching their parents go through some despondent times can make one want to be a little more careful with their hard-earned funds. The second theory I have is that Baby Boomers were always lead on to believe that their company’s pensions would take care of them just like their parents. As globalism kicked into full steam, many were shocked and horrified to see their pension plans dissolve. Millennials were never brought up in a world where a pension was even an option. On top of all that, social security might not even be available, or at least not in the robustness it currently stands at. Millennials therefore have to save on their own if they are going to have any sort of future retirement.
A healthy savings rate is crucial to the stability of any economy. I hope that if you are currently not participating in your employer’s 401k plan that you would reshuffle your budget and start contributing now. You are leaving free money on the table.
Overall, this article left me hopeful for the future, and I hope it did for you too.
Wonderful Moment of the Day: Lying in the grass.
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