Retirement myths are a dime a dozen. Reaching the promised land of financial freedom and tranquility is no easy journey given the perpetually-changing retirement landscape. In addition to the usual questions like how much money should I save, workers are becoming increasingly responsible for their own nest eggs. However, how much do we really know about retirement planning?
Defined contribution retirement plans like a 401(k), where certain amounts of money are invested by employers and employees on a regular basis, are the new primary source of retirement funds for younger generations. In fact, State Street Global Advisors (SSGA) released a report taking a closer look at who they call “Generation DC.” This group is made up of employees aged 22-50, and are the 401(k) guinea pigs providing valuable insight about false beliefs.
“Many long held beliefs about how millennials and Gen Xers want to engage with their DC plan are off base and call for some myth-busting,” says Fredrik Axsater, senior managing director and head of Global Defined Contribution at SSGA, in a press release. “When employers combine a deeper understanding of employees’ views about retirement and focus their engagement efforts around important life stages, like starting a career or starting a family, savings programs can be far more successful.”
Let’s take a look at five surprising retirement myths that just got debunked.
1. Humans are obsolete in the retirement planning process
Retirement planning? Is there an app for that? Of course, we have apps for everything these days, from tracking your investments to showing you what you’ll look like when you’re old and gray. But, that doesn’t mean millennials would necessarily prefer to interact with apps rather than humans when it comes to managing their financial futures. SSGA finds 59% of workers aged 22-25 “want an in-person meeting once a year and technology isn’t really going to help.” Surprisingly, only 38% of Gen Xers aged 45-50 say the same thing. Employers should keep this in mind when offering retirement guidance to their employees.