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BOSTON--(BUSINESS WIRE)--Apr 18, 2023--
If the key to a financially secure retirement is to save big and start early, millennials are doing a lot right, in part because of provisions in retirement plan design, such as automatic enrollment of new employees, to help more American workers reach their retirement goals. A new survey by Natixis Investment Managers (Natixis IM) found that millennials started saving for retirement 11 years earlier in life than baby boomers did, and they are contributing a whopping 16% of their annual salaries toward it, on average.
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Expected Sources of Retirement Income (Graphic: Business Wire)
The survey shows that further expansion of retirement plan provisions, codified by recent passage of the SECURE 2.0 retirement act, strongly resonates with employees amid considerable changes in retirement expectations, financial conditions, and workforce demographics.
“American workers are feeling the weight of responsibility for retirement funding, and younger generations, in particular, are pushing for changes that will better meet their distinct needs and preferences,” said Liana Magner, Head of Retirement and Institutional in the US for Natixis Investment Managers. “Making retirement savings easy and appealing and helping them stay on track, particularly during periods of financial stress, will take united efforts from employers, individuals, and policymakers.”
The survey found serious shortfalls in retirement savings, especially among baby boomers, of whom 58% say their biggest regret is that they didn’t start saving sooner. While millennials have time on their side, the financial headwinds they are facing at a crucial stage of life threaten to derail their progress.
“It’s gotten a lot harder in the past two years for people to generate the personal savings that will ground their retirement income plans. It’s gotten to the point where one in five millennials, the generation that started out living in their parents’ basement, now think they might end up in their kids’ garage,” said Dave Goodsell, Executive Director of the Natixis Center for Investor Insight. “To adapt to today’s complex financial environment, employers should adapt their retirement plan benefit design and tailor their investment offering around the evolving needs of a multi-generational workforce.”
Recent Policy Changes Are a Step in the Right Direction
The survey suggests that provisions put in place by SECURE 2.0 will be a positive step in the right direction once they go into effect. Among these provisions are automatic enrollment in company-sponsored DC plans with default investment options known as Qualified Default Investment Alternatives (QDIA); recognition of student loan repayments to qualify for employer matches; linked emergency savings accounts; and higher catch-up contribution limits for older workers. The survey found:
A second, separate ruling, the US Department of Labor’s Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights, adds another critical incentive to the mix: consideration of participant preferences when constructing a menu of investment options. According to the survey findings, DC plan participants show a remarkably high level of interest and engagement around ESG (environmental, social and governance) issues and sustainable investments.
What Employers Can Do: Give employees what they want with a range of options that matter
With mandates taking effect, employers will need to focus on their Qualified Default Investment Alternative, overall investment offering, educational support, and guidance for their employees.
Matching contributions may also be an effective lever for employers in a tight labor market. While respondents report an average maximum company match of 7.8%, millennials are most likely to work for a company that offers greater than a 10% match (31%). More than half (54%) of millennials and 43% of respondents overall say their employer increased the company’s match in the past 12 months.
The majority of those surveyed, particularly millennials, also are open to policy changes that would demand more from employers, financial services providers, individuals and the government alike.
A copy of the report with analysis and findings from the Natixis Investment Managers 2023 Survey of Defined Contribution Plan Participants/Non-Participants can be found at: https://im.natixis.com/us/research/2023-defined-contribution-plan-participant-survey
Methodology
Natixis IM surveyed 736 US workers, all of whom have access to a company-sponsored defined contribution (DC) retirement savings plan, such as a 401(k), 403(b), 457, SIMPLE IRA or SEP. The survey, conducted by CoreData Research in January and February 2023, looked at behavior, preferences and attitudes about retirement savings across three generations including millennials (ages 27 to 42), Generation X (ages 43 to 58) and baby boomers (age 59 and above).
About Natixis Investment Managers
Natixis Investment Managers’ multi-affiliate approach connects clients to the independent thinking and focused expertise of more than 15 active managers. Ranked among the world’s largest asset managers1 with more than $1 trillion assets under management2 (€1 trillion), Natixis Investment Managers delivers a diverse range of solutions across asset classes, styles, and vehicles, including innovative environmental, social, and governance (ESG) strategies and products dedicated to advancing sustainable finance. The firm partners with clients in order to understand their unique needs and provide insights and investment solutions tailored to their long-term goals.
Headquartered in Paris and Boston, Natixis Investment Managers is part of the Global Financial Services division of Groupe BPCE, the second-largest banking group in France through the Banque Populaire and Caisse d’Epargne retail networks. Natixis Investment Managers’ affiliated investment management firms include AEW; DNCA Investments;3 Dorval Asset Management; Flexstone Partners; Gateway Investment Advisers; Harris Associates; Investors Mutual Limited; Loomis, Sayles & Company; Mirova; MV Credit; Naxicap Partners; Ossiam; Ostrum Asset Management; Seventure Partners; Thematics Asset Management; Vauban Infrastructure Partners; Vaughan Nelson Investment Management; and WCM Investment Management. Additionally, investment solutions are offered through Natixis Investment Managers Solutions and Natixis Advisors, LLC. Not all offerings are available in all jurisdictions. For additional information, please visit Natixis Investment Managers’ website at im.natixis.com | LinkedIn: linkedin.com/company/natixis-investment-managers.
Natixis Investment Managers’ distribution and service groups include Natixis Distribution, LLC, a limited purpose broker-dealer and the distributor of various U.S. registered investment companies for which advisory services are provided by affiliated firms of Natixis Investment Managers, Natixis Investment Managers S.A. (Luxembourg), Natixis Investment Managers International (France), and their affiliated distribution and service entities in Europe and Asia.
1 Cerulli Quantitative Update: Global Markets 2022 ranked Natixis Investment Managers as the 18th largest asset manager in the world based on assets under management as of December 31, 2021.
2 Assets under management (“AUM”) of affiliated entities measured as of December 31, 2022 are $1,151.3 billion (€1,078.8 billion). AUM includes AlphaSimplex Group, LLC ($8.2 billion / €7.7 billion), which was acquired by Virtus Investment Partners, Inc., effective April 1, 2023. AUM, as reported, may include notional assets, assets serviced, gross assets, assets of minority-owned affiliated entities and other types of non-regulatory AUM managed or serviced by firms affiliated with Natixis Investment Managers.
3 A brand of DNCA Finance.
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View source version on businesswire.com:https://www.businesswire.com/news/home/20230418005492/en/
CONTACT: Press:
Kelly Cameron
+1 617-449-2543
Kelly.Cameron@natixis.com
KEYWORD: MASSACHUSETTS UNITED STATES NORTH AMERICA
INDUSTRY KEYWORD: GENERATION X PERSONAL FINANCE MILLENNIALS BABY BOOMERS FINANCE ACCOUNTING PROFESSIONAL SERVICES CONSUMER
SOURCE: Natixis Investment Managers
Copyright Business Wire 2023.
PUB: 04/18/2023 08:58 AM/DISC: 04/18/2023 08:57 AM
http://www.businesswire.com/news/home/20230418005492/en