Depending upon age and life circumstances, employees have different savings goals that can dramatically affect their attitude toward retirement plan participation and their level of engagement, signaling a need for advisers and employers to offer more individualized retirement plan messaging and tools.

Although Generation Xers are typically concerned about saving for and funding their retirement, their younger co-workers, the millennials, are more concerned with short-term savings goals, including for the purchase of a home or paying off debt, according to a recent investing trends research study by Cogent Reports, a division of Livonia, Mich.-based Market Strategies International. Further, nearly half (45%) of single parents in a recent Allianz study said saving for their kids’ education was their top priority.

See related story: Millennials facing bigger debt and financial woes

Advisers and employers hoping to increase retirement plan participation and better prepare employees for retirement should work to tailor plan messages and tools to provide employees of all ages and circumstances a more individualized plan experience. 

Insurers and advisers selling their products “that can properly plan for and address the specific needs of more finely targeted market segments will find success in this fragmenting market,” says Steve Webersen, director of research at the Hartford, Conn.-based Conning Inc., a management and research provider to insurance companies.

He says a recent Conning research report found strategies that have ridden the wave of the baby boomers may not be up to date, as assumptions developed for that age group may not be in line with the changing diversity of our nation’s population.

For example, more than half of millennials (American workers age 18-34) believe Social Security will no longer exist by the time they reach retirement age, according to a Principal Financial Group report on Generation Y workers and retirement plan participation.

Yet, while millennials believe more of the burden of funding their own retirement will fall on their shoulders, short-term financial goals continue to take precedence over the priority to save for retirement. Twenty-two percent of young workers surveyed by the Principal Financial Group say paying down credit card debt is their highest priority, with 18% saying their highest priority is saving for a house and 17% paying off student loans. Only 11% of the Gen Y workers said saving for retirement is their top financial priority.

Likewise, while single parents in the Allianz study say they are willing to prioritize saving for their children’s educational needs, they recognize this means putting their own financial future and retirement in jeopardy.

Education tailored toward employee circumstances is particularly important for employers to consider, as are automatic features and tools that encourage and/or require employee participation.

Accoridng to Transamerica’s 15th Annual Retirement Survey released July 15, millennials, specifically, are apt to take advantage of such features.

“Millennials are taking advantage of innovations to 401(k) plans that have been introduced over the years, including professionally managed accounts and target-date funds," says Catherine Collinson, president of the non-profit Transamerica Center for Retirement Studies.

The Transamerica study suggests advisers and employers hoping to improve their workers’ retirement outlook should also discourage loans and withdrawals from retirement accounts, consider structuring matching contribution formulas to promote higher salary deferrals, ensure educational offerings are easy to understand and promote incentives to save.

Advisers and employers can also work with employees to develop a retirement readiness strategy based on their specific age, needs and life circumstances.

"One of the most important secrets to attaining retirement readiness is having a well-defined written strategy about retirement income needs, costs, expenses and risk factors," says Collinson.

While the majority of millennial workers (59%) say they have a retirement strategy, only 13% have a written plan (the other 46% have a plan but it is not written down), the TCRS study found. Surprisingly, among those who have estimated their retirement savings needs, 52% said they had "guessed" and only 10% have used a retirement calculator or worksheet, highlighting a real need for help from knowledgeable benefit professionals when making such a strategy.

See related story: More retirees planning to work through the golden years

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