Millennials, the generation born between the early 1980s and the mid-to-late 1990s, make up about one-third of today’s U.S. workforce. They are better educated than previous generations, with a greater proportion of them possessing a college degree. Because they have lived through the Great Recession, they are more risk averse. They are also more likely to begin to save earlier in their careers.

Many millennials believe they will need to take action on their own to save for their retirement. Four out of five millennials surveyed are worried that Social Security will not be there for them when they are ready to retire. Not surprisingly, 55% cite self-funded savings as the expected primary source of retirement income according to a recent survey by the Transamerica Center for Retirement Studies.

But today’s 53 million millennial workers face challenges when it comes to saving and investing for their retirement. This generation is disproportionally burdened by money-related stress, with 24% reporting that student loan debt is the source of this stress, according to a recent survey by Charles Schwab. And 72% of millennial workers surveyed by Transamerica agree that they do not know as much as they should about retirement investing and, among those participating in a retirement plan, a quarter admit to being unsure of how their savings are invested.

Helping the youngest workers today understand the importance of securing their long-term financial well-being is an investment that will yield significant benefits. How soon and for how long an individual saves is important because of the power of compound interest. For example, compare a person saving $100 a month starting at age 27 with a person saving the same amount starting at age 37. The first will have contributed just one-third more by age 67, but would accumulate twice as much in savings, assuming a 6% annual rate of return.

Today’s younger workers are more likely to work in nontraditional job settings and more likely to switch jobs than other age groups, according to Bureau of Labor Statistics (BLS) data. The median job tenure among workers age 25 to 34 (2.8 years) is less than one-third of older workers age 55 to 64 (10.1 years). What’s more, 55% of jobs held by those ages 18 to 28 lasted less than one year, and 70% of jobs lasted no more than two years. The challenges that come with frequent job changes include not staying long enough to become fully vested in the company 401(k) plan, the failure to roll over their retirement savings into new retirement plans, or forgetting about their account altogether when they change jobs.


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