Helping Millennials Save for Retirement

Younger employees know that saving for retirement is important. But when asked to take the big risks that would benefit them most, they can't even.

By Jennifer Arnold Feb 23, 2017

“Before I started working … I didn’t know much about personal finance,” says Laura Dixon, 26. “I knew I should be saving, but with student loans on top of rent and basic day-to-day expenses, it was all too overwhelming."

Fortunately for Dixon, she got a job as a graphic designer at Veterans United Home Loans, a dedicated Veterans Administration loan provider based in Columbia, Mo. As part of her employee benefits, Dixon has access to a wide array of resources designed to increase her financial literacy and encourage good money management habits.

“Since the average age of our employees is 34, we try to focus on this area and regularly remind employees [of] the value of starting to save early rather than later,” says Meggie Hess, human resources supervisor at Veterans United. “We hear from our employees regularly that financial wellness is an area they need help on.”

That feedback is not unique. Research shows that the current generation of young adults—those born roughly between 1982 and 1998, often referred to as Millennials—is dealing with a unique set of circumstances and attitudes that impact their financial health.

For example, studies show that young adults are extremely risk-averse investors. “[Millennials are] at the age when they should be taking on those risks because [the risks] correspond to larger gains, but they view it as so risky that they won’t invest,” says Dora E. Bock, Ph.D., assistant professor of marketing at Auburn University, who has co-authored several studies on the subject. Some experts attribute that attitude to the Great Recession: “In their formative years, they saw what happened with people losing homes and saw how it affected those close to them. Now they approach investing from an avoidance perspective,” Bock says.

At the same time, Millennials are entering the workforce with historic levels of debt. “This generation is the most highly educated, [with] high degrees of student loan debt, which is preventing them from saving as they should,” Bock says. Younger workers’ overall risk aversion and high student debt contribute to one startling fact: According to Vanguard Institutional Investor Group, workers under age 35 have the lowest 401(k) participation rate of any age group.

Adding to these pressures, many Wall Street analysts are predicting lower stock market gains over the next decade, a drop that could mean Millennials will have to save more—and longer—to acquire enough income for retirement.

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Why It Matters

​Over the past several decades, employers have recognized that employees’ physical health impacts the workplace, prompting them to introduce wellness programs designed to help workers lose weight, quit smoking, increase their activity levels and more. Now businesses are learning that employees’ financial wellness is equally critical to individual and corporate health and are seeking ways to respond.

Most organizations offer some type of savings plan for employees, be it a 401(k) or another vehicle. But experts suggest that employers consider offering financial literacy and wellness programming in addition to traditional savings plans and pay particular attention to the participation and contribution rates of their Millennial employees.

Why single out this demographic for special treatment? Forward-thinking employers report a variety of reasons, from aiding in recruitment to reducing turnover to strengthening the nation’s economy.

At iPlace USA, a sourcing and recruiting firm with 400 employees in McLean, Va., and India, 80 percent of the company’s workforce is under age 30. The organization’s leaders found that many employees were unable to manage the large incentives and bonuses they earned and thus landed in financial trouble. “We have had people disappear from the workplace due to the severity of their debts,” says Jeanne Heydecker, iPlace’s chief strategy officer. In response, iPlace introduced a money management curriculum and offered employees free, confidential one-on-one meetings with a financial advisor. “Before starting the program, we were experiencing a 6 percent turnover each month, which meant we were replacing 72 percent of our staff each year,” Heydecker says. “Since starting the program, we are now down to less than 2 percent [turnover] on average each month."

Financial concerns can affect business results in more subtle ways as well. Los Alamos National Laboratory (LANL), a national security research center in Los Alamos, N.M., introduced a financial wellness program in 2014 after finding success with its physical wellness initiative. “We know that if people are taking care of themselves physically, they’ll have more energy,” says James Johnson, chief financial officer at LANL. “If they’re less stressed about their financial situation, they’ll be more productive.”

Sidebar: Supporting Financial Literacy 

Free resources for employers and employees include the following:

National Financial Educators Council provides financial education resources, promotes advocacy campaigns and helps organizations build sustainable financial education programs. was created by the congressionally chartered federal Financial Literacy and Education Commission. The site offers a variety of resources for all ages, including budgeting worksheets, financial wellness checklists, assessment quizzes and specialized information for various life stages.

AARP may not be the organization Millennials think of first when seeking information on financial management, but its website offers robust tools for planning retirement savings, including 401(k) contributions, based on age, income and projected retirement age.

LANL also views its financial wellness program as a recruiting and retention tool. The pool of qualified candidates for the lab’s highly specialized positions is limited, and competition is fierce. And because the work is so complex, holding on to employees with tenure is critical. “Someone may have a Ph.D., but it may take five years to get to the point where they are a world leader in their area of expertise,” Johnson says. “If they leave [LANL] in two or three years, we’re not getting the best of their abilities.” This is particularly important as LANL looks to recruit and retain the next generation of scientists to replace the retiring Baby Boomer generation.

Another reason for businesses to invest in Millennials’ financial literacy: They are our economy’s future. “Millennials represent 92 million consumers,” Bock says. “If they make financial mistakes, it is going to affect other cohorts. It is critical that they are employed and saving.”

Education and Incentives

Employers are offering a wide range of financial resources to their younger employees and using novel incentives to encourage participation and progress toward money management goals. Education is a common approach: Many employers offer in-person and online classes on a variety of financial topics. Some organizations provide multi-week “boot camp” programs, followed by sessions on specialized topics.

​Sidebar: Tips for Talking Money with Millennials 

• Keep it simple. Avoid jargon, and keep communications informal and conversational.

• Offer choice and control. Choose plans that provide multiple options, and allow participants to make changes easily and independently. For educational opportunities, try to offer both onsite and online resources to allow for different lifestyles and learning approaches.

• Personalize the message. Use individuals’ names as much as possible, and make sure materials are relevant to the audience’s stage of life and situation.

• Avoid paper handouts. Face-to-face classes are still effective, but be sure to offer all materials in digital format and back them up with online resources, videos and interactive tools.

• Don’t judge. Avoid comments that disparage Millennials’ habits or characteristics (for example, their reliance on technology or their high student loan debt). Perhaps intended in good humor, these types of statements are likely to turn off the audience.

At LANL, the financial wellness curriculum includes a three-day prerequisite workshop, as well as a full curriculum of 65 different courses, covering everything from student loan basics to first-time home buying to budgeting. Fifteen of the courses are designed specifically for early-career employees. “Over 5,000 people have attended,” Johnson says. “We’ve had near-capacity crowds at every session. It’s been mind-boggling.”

Education can come in many forms: group classes, individualized sessions, employee-led affinity groups and online courses. Your benefits provider is often a good place to start when looking for expert speakers. Businesses that don’t have the expertise or resources to offer onsite seminars can take advantage of Web-based services that provide self-paced learning modules for a modest fee.

​LANL offers both options. In addition to in-house sessions, it provides online resources through a workplace communications solution called GuideSpark. Using LANL’s GuideSpark site, employees can leverage a financial wellness assessment tool to generate individualized prioritized action lists, with links to videos and other educational resources for each identified goal.

Most employers offer a financial match as part of their 401(k) plans, but some are taking incentives to the next level. For example, Veterans United has a program called “High Five” that grants employees paid time off when they reach personal financial goals. “When they experience a milestone like paying off credit cards, maxing out their retirement plan or meeting with a financial planner, we’ll give them extra time off,” Hess says. “We’ve seen hundreds of employees participate.” 

‘In their formative years, they saw what happened with people losing homes and saw how it affected those close to them. Now they approach investing from an avoidance perspective.’
–Dora E. Bock, Ph.D.

Even small startup businesses without 401(k) plans can encourage younger workers to save. A.J. Saleem, an entrepreneur in Houston, has only eight employees in his company, Suprex Tutoring, all of whom are Millennials. While he’s not in a position to offer a 401(k) yet, he still encourages his staff to save by offering a 10 percent match on their automated savings through the micro-investing app Acorns. “I encourage them to take advantage of the program by sending a monthly e-mail reminding them of the 10 percent offer,” Saleem says.


Craft the Right Message

​All of the resources and incentives in the world won’t make a difference, though, if your message doesn’t resonate with your audience. Much has been written about tailoring your approach based on the differences in communication styles between generations; the same lessons apply when talking about financial wellness and savings plan participation. You’ve probably heard this before, but it bears repeating: Millennials tend to prefer choice and control, and they want messages that are personalized and relevant to them. Avoid jargon-filled printed materials and presentations, and use video, interactive tools and online resources to grab their attention.

Most important, don’t be patronizing or condescending. Don’t make jokes about their generation’s habits or characteristics, and don’t minimize their concerns. Instead, focus on teaching them about the nature of risk and how savvy investors approach such challenges over time. “We need to address risks associated with investing and educate [young adults] on why it’s important to take risks at this stage,” Bock says. “They need to understand that over time the allocation will change to be more conservative.” Interactive tools that allow employees to plug in target dates are useful for making the far-off goal of retirement seem more real.

On the topic of saving, research suggests that certain language is more effective in reaching young adults. The Center for Retirement Research at Boston College conducted targeted research with full-time workers between the ages of 18 and 34 and compared their preferences with those of full-time workers ages 50 to 64. The center found that, when talking about long-term savings goals, younger workers were most responsive to messages with “abstract framing,” meaning text that was more vague and less urgent. For example, a communication might say, “If you haven’t done so already, you may want to consider …” rather than “Contribute 15 percent of your paycheck to your 401(k) to reach your retirement goal.”

On the other hand, Millennials responded better to concrete framing when the topic involved short-term financial goals such as biweekly savings contributions: “Aim to save 15 percent each pay period.” Take these findings into account when developing communications for this demographic.

Financial Freedom

Across the country, businesses are seeing results from their efforts to educate and encourage younger workers to save. LANL saw a surge in employees logging in to its online portal to change their 401(k) contribution amounts or asset allocations after initiating its financial wellness program. More than 90 percent of employees currently participate in the plan, and 97 percent stay enrolled after joining. By contrast, before LANL launched its program, the organization “had about $4 million of [401(k)] match dollars not taken,” Johnson says. “We’ve worked that well below $3 million now, but we want it to be zero.”

Younger employees are seeing a difference, too. Laura Dixon, the Veterans United graphic designer, now participates in her employer’s 401(k) plan and has a budget, a savings account and a dedicated emergency fund. “By setting aside money in this way, I have more peace of mind than I could have predicted,” she says. Recently, she earned some extra time off by reaching a few of her financial goals: Paying off half of her student loan debt and putting nearly 10 percent of her annual income into retirement savings. Dixon is pleased with the progress she has made: “I finally feel like I have some control over my financial future.”

Sidebar: ​It’s All in How You Frame It

Findings from the Center for Retirement Research at Boston College suggest that Millennials respond better to “abstract framing” when learning about long-term financial goals, such as retirement savings, but “concrete framing” when receiving guidance on short-term savings goals, such as biweekly payroll deductions. 

Abstract Framing
• Use vague, nonurgent language.
• Focus on why rather than how. 
• Examples: “If you haven’t already, you may want to consider … ” 
and “Save as much as you can afford … ”

Concrete Framing
• Use specific, action-oriented language.
• Focus on how rather than why.
• Example: “Save 15 percent of your paycheck each pay period.”

Jennifer Arnold is a freelance writer and editor based in Jacksonville, Fla. Illustration by Laura Bruce for HR Magazine.

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