Capitol Hill Panel Keys in on Millennial Savings Challenges
The Financial Services Roundtable recently hosted an event
on Capitol Hill that amounted to a retirement counseling session for Millennials working in Congress.
Headlining the event was the youngest woman ever elected to Congress, Rep. Elise Stefanik (R-N.Y.). A freshman member first elected in 2014 at age 31, she is squarely in the Millennial generation (loosely defined as a demographic cohort born from the early 1980s to the early 2000s). Stefanik chairs the House Republican Policy Committee’s newly created Millennial Task Force designed in part to examine ways the Republican Party can connect with these voters.
Stefanik rattled off some eye-catching statistics about Millennials, a cohort of some 80 million in the United States alone. In fact, Millennials have now surpassed the numbers of Generation X (loosely defined as a demographic group born from the early 1960s to the early 1980s) in the U.S. workforce. In the upcoming U.S. general election in 2016, Millennials will have a voting plurality; in other words, a relative majority of people voting will be from the Millennial generation. By 2020,,Millennials will make up the largest share of the U.S. workforce of any generation.
Rep. Stefanik and the other panelists identified some key financial burdens of Millennials and the challenges these burdens present when it comes to saving for retirement
. The key concern is that Millennials are the most educated generation in American history, but also carry the largest share of student loan debt. The majority of Millennials report that they struggle with too much personal debt (the lion’s share of which is student debt). As such, the savings rate of Americans under the age of 35 is -2%.
With these immediate debt challenges, it is not surprising that many Millennials are not focusing on saving for retirement. But the panelists stressed that building a secure retirement is much easier for Millennials if they start saving what they can as soon as they can, given the powerful finance principles of compounded interest and the time value of money. Stefanik said that a comprehensive information awareness campaign about these issues is critical to communicate to Millennials that preparation is essential to build a secure retirement.
Another topic discussed was where to go for sound financial advice and how Millennials prefer to receive that advice
. The panelists relayed that Millennials want personalized financial advice as they are entering a period of life where critical financial decisions have to be made, including: what job to take, whether to rent or purchase a home, or whether or when to have children. The question for many Millennials is who to trust in order to get this sound advice. Several panelists at the FSR-sponsored event took the opportunity to criticize the impact that the Department of Labor’s proposed fiduciary rule could have on access to retirement investment advice by this demographic group.
The panelists also noted that since Millennials change jobs frequently, their retirement assets are particularly vulnerable to leakage from the system. As a typical Millennial could have retirement assets in multiple retirement vehicles, decisions to cash-out or where to consolidate retirement assets could have profound impacts on the retirement security of the Millennial generation.Andrew Remo is the American Retirement Association’s Director of Congressional Affairs.