Transamerica Survey Dispels Myth That Echo Boomers Don’t Care About Retirement
Source: International Foundation of Employee Benefits Plans

The Sixth Annual Transamerica Small Business Retirement Survey dispels the myth that Echo Boomers [born between 1979-86 – cc] are simply too young to care about saving or planning for retirement. Survey data shows that younger workers are hungry for more retirement planning education and advice from their employers and, unless they receive it, their participation in company retirement plans may continue to remain low.

“There is a misperception that workers in their 20s are simply too young to care about retirement planning,” said Catherine Collinson, retirement and market trends expert for the Transamerica Center for Retirement Studies. “The truth is, these workers are very concerned about saving and want more information – especially from their employers. It’s important that employers find a way to reach their younger workers through targeted education.”

The reality is that Echo Boomers do care about retirement planning. The majority (93 percent) view employee-funded retirement plans, such as 401(k) plans, as an important workplace benefit. They are just as likely as older workers to have approached their supervisor or human resources department about retirement benefits, either with questions or suggestions about the plan.

Yet, Echo Boomers lag behind other generations when it comes to saving for retirement – either in a company plan or on their own. Just 37 percent of Echo Boomers with access to an employee-funded retirement plan participate, compared to 75 percent of Gen Xers [born between 1965-78 – cc] and 85 percent of Baby Boomers [born between 1946-64 – cc]. A similar trend is found in non-workplace retirement savings. [Text continued at site.]

There’s probably another reason why Echo Boomers are lagging behind Generation X right now: many of them are still getting started in their careers and aren’t making high incomes yet. (Studies show that the highest income years tend to be between ages 30 and 55.) It’s not always easy to devote 5% or more of one’s income toward retirement when living on 100% of the income involves barely scraping by. Retirement plan participation by Gen Xers has risen dramatically in the past few years as we get into our late twenties and early thirties.

I do think, however, that there will be a similar dramatic rise for Echo Boomers as they get into the same age bracket – and that it will be enhanced if the educational programs are put into place. This interest in information is an excellent sign. Both Generation X and the Echo Boomers have reason not to trust the social security system, as we’re the ones upon whom the burden will fall as the overall age in the United States creeps up. (Both of our generations are smaller than the Baby Boomers, although there are more Echo Boomers than Generation X.) We’re learning, simply from watching our parents, that saving for retirement is absolutely critical.