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About 30 percent of hospitality sector employees are Millennials, a larger percentage than ever before, according to the ADP Research Institute. However, very few of these individuals feel confident about their financial future. A 2013 Employee Benefit Research Institute survey reveals that only 15 percent of employees ages 25–34 believe they will have enough money to live comfortably during their retirement years.
Chris Augelli, vice president of product marketing and business development for ADP, recognizes the potential retirement hurdles that lie ahead for Generations X and Y, and aims to increase retirement awareness and education among these young people.
“Today's workers expect that they are going to have to work longer and retire later in order to accumulate sufficient retirement savings,” Augelli says. “Up to 18 percent of [Baby Boomers] are stepping out of the workforce in the next five years, meaning even more of our workforce now is going to be constituted of Generation X and increasingly, Generation Y. The important thing here ... is that the retirement savings equation for Generation Y in particular is a vastly different landscape then what it was for the boomer generation.”
With a tumultuous transition quickly approaching, Augelli says it is more important than ever for young generations to be financially savvy. He says it’s essential for employers to provide young personnel with retirement readiness education and ways to start saving.
“It's really client sponsors and employers,” Augelli says. “We're hoping they are looking at data like this, and they are realizing the turnover in their workforce, and that they are going to adopt different strategies to better engage Millennials in the retirement saving process.”
In order to engage Generations X and Y, employers must first reinstill Millennials’ confidence in the notion of savings. “[Millennials] have gone through the upheaval of 2008, and they've seen … what happened to their parents and their savings and their job situation. They now have trepidation when it comes to saving,” Augelli says. “Do they implicitly trust the stock market? Time and again the research is pointing to no, they do not, and with good reason.”
Millennials are full of questions, Augelli adds. They are cautious of saving, they question whether social security will be there for them in a meaningful way, and a great majority does not have access to any pension plan. Augelli says this high level of distrust provides a terrific opportunity for employers.
“While Millennials may not know how to go about saving for their own retirement, they are very much aware that they do need to save for their retirement,” he says. “Those employers who can give them access to a qualified retirement plan and give them guidance as to how to maximize their savings, they, in turn, receive greater loyalty. It gives the employers a true chance to help in attracting and attaining the best talent.”
Augelli drives home the importance of earned media in the workplace. He says instituting an internal social media site or blog can benefit the younger demographic tremendously. This site can provide an arena for discussion between seasoned employees and those just entering the workforce. Individuals are able to share their successes and advice for investing, saving, and retirement.
“People naturally trust the recommendations of other people like them or people who they have a personal relationship with and trust their input,” Augelli says. “Nowhere is that preference for earned media stronger than with the Millennial generation.”
He says it’s also beneficial for employers to provide an interactive website with a calculator, retirement articles, instructive videos, and information on company retirement and savings plans, so young workers can have 24/7 access to retirement education.
By Marlee Murphy