US. Millennials Benefiting from Retirement Plan Modernization
Millennials are the first generation to fully benefit from improvements made to retirement plans over the last decade, according to a survey from the Empower Institute. They are on track to replace 75% of their income in retirement, compared to 64% for Americans overall, 61% for Gen Xers and 58% for Baby Boomers.
The Pension Protection Act of 2006 was enacted when Millennials began entering the workforce, and it paved the way for automatic enrollment and escalation, all the while acknowledging the significance of employer matches. Forty-one percent of Millennials are automatically enrolled in a defined contribution (DC) plan, compared to 38% of Gen Xers and 33% of Boomers. In addition, 38% of Millennials are in a plan with automatic escalation features.
“New features such as automatic enrollment and automatic escalation have come a long way in making access to retirement savings programs easier for employees and in shaking off some of the concerns with earlier DC plan designs,” says Edmund Murphy III, president of Empower Retirement. “Millennials are the first generation in the workforce to fully benefit from changes in the law made in 2006.”
Read More: Plan Adviser