Younger Workers Are Being Smarter About Retirement And It Shows

Posted March 21, 2021 by Mark Perna

Though their retirement is a long way off, the younger generations can show the rest of us a thing or two about planning ahead. Mark’s article, “Younger Workers Are Being Smarter About Retirement And It Shows” published at on March 16, 2021.

Managing money—it’s a touchy subject, especially for younger workers who may harbor regrets about their financial past. But while the younger generations have made their share of money gaffes, they’re starting to play smarter when it comes to planning for, and protecting, their retirement.

New data from Personal Capital found that, despite the upheaval and uncertainty created by the pandemic, workers in their 20s are doing surprising well in saving for their future—even a future as far-off as retirement.

Overall, people in their 20s are also the least likely to say they don’t have a financial plan for their retirement savings (just 29%). In addition to being the age group most likely to be taking advantage of maximum matching 401(k) contributions from their employer (57%), professionals in their 20s are also the second leading age demographic for contributing to their 401(k) every paycheck. On this metric, they trail just after those in their 30s (58% versus 61.6%, respectively).

Workers in their 20s are doing surprisingly well in saving for their future—even a future as far-off as retirement. Click To Tweet

Despite the financial hardships experienced by so many during COVID, people in their 20s were, overall, remarkably disciplined with their retirement savings. Personal Capital discovered that they are the second most likely age group to have not dipped into their retirement savings in the early months of the pandemic, only behind those in their 40s (43.6% versus 41.7%, respectively).

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Of course, no one’s perfect.

As tax season approaches, the study found that people in their 20s are the most likely to have not planned for taxes, with nearly 3 in 10 admitting they have not planned accordingly. But even while many young professionals aren’t planning ahead for their taxes, they do seem to be thinking forward to their retirement years—and preparing now.

A tip for employers

With younger professionals showing earlier aptitude for retirement planning than other generational cohorts, it’s clear the future is on their mind. Now is the time for employers to raise the stakes in their recruiting and retention efforts. Offering robust and valuable resources for retirement planning and tax preparation can position your organization as a partner in each employee’s long-term success.

This will not only attract desirable potential hires, but also help your organization retain top talent for the long term. Younger workers are obviously thinking long term, so offering robust retirement benefits can help frame your company as a key part of meeting those long-range goals.

Room (and time) for improvement

Perhaps the youngest generation of professionals don’t receive enough credit for how forward-thinking they are when it comes to protecting their retirement. According to the research, their financial acumen places them among the most likely to capitalize on tax-free savings through their employers, while also avoiding tax penalties through early withdrawals of those funds.

But while all this data encouraging, the findings show that there are always opportunities to do better. Though 57% of younger workers are contributing to their 401(k) every paycheck, that leaves 43% who are not. Another 25% aren’t taking advantage of the maximum contribution match from their employer, and 36% report that they’ve cashed out their savings.

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In general, younger workers are trending toward the positive end of the retirement planning spectrum. But there’s always room to improve. The good news is, their early start will give them plenty of time to master the financial strategies that will set them up for long-term success.

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About The Author
Mark Perna
Mark C. Perna is an international speaker and bestselling author. He also serves as CEO of TFS Results, a strategic consulting firm at the forefront of the national paradigm shift in education and workforce development.
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