Six-in-Ten Millennials Consider Cashing Out of Retirement Plans in Large Market Downturn

October 11, 2022

Latest Cogent Syndicated DC Participant Planscape™ report from Escalent shows financial wellness offerings better prepare participants for retirement

 A new Cogent Syndicated report from Escalent shows plan participants are growing increasingly weary in today’s volatile market, as six in ten millennials say they would cash money out of their retirement plans in the event of a large market downturn (in which the major market indices decrease 10% or more). This translates to an opportunity for firms to quickly intervene and provide guidance and reassurance to plan participants.

“These findings underscore the overarching need for increased education and investment guidance, especially as anxiety around market volatility and inflation persist,” said Sonia Davis, senior product director at Escalent. “Retirement plan providers and investment managers play a critical role quantifying retirement savings goals, connecting participants with resources to ensure confidence, and ultimately, encouraging them to stay committed to the long game for their personal financial betterment.”

These are the latest findings from Escalent’s DC Participant Planscape™ report, which helps defined contribution (DC) plan providers maximize participant contributions, enhance engagement, leverage cross-sell opportunities and attract rollover dollars.

Financial wellness programs have proved instrumental in creating more confidence and retirement readiness, with users citing significantly higher confidence rates in achieving their retirement savings goals. One-third (35%) of financial wellness program users are extremely confident in their ability to achieve their respective retirement savings goals—double the rate among non-users (17%). Confidence levels are most pronounced among millennials (42% of users vs. 15% of non-users) and Gen Xers (30% of users vs. 15% of non-users).

Participants are seeking an array of financial wellness offerings, with Gen Xers and 2nd Wave Boomers at the helm. Participants indicate the program options they find most helpful include having access to retirement income planning, Social Security and Medicare advice, a financial advisor, and online access to financial planning tools.

While a large proportion of millennials are considering pulling out of their retirement in the event of a market downtown, they are also at the helm of exploring new investment options for their portfolio. Nearly half of millennials (49%) are extremely interested in investing in ESG inside ESRPs, a notable uptick from 44% last year. More plan participants are also jumping into digital assets, such as cryptocurrency— at 36% of respondents compared to 23% in 2021. Millennials lead the way in the category with 61% investing in crypto.

About DC Participant Planscape™

Cogent Syndicated, a division of Escalent, conducted an online survey of a representative cross section of 4,011 DC plan participants from May 10 to June 1, 2022. Survey participants were required to be 18 years or older and contribute at least 1% to a current plan and/or have $5,000 or more in at least one former plan. Targets were set to investor gender, region, age, education and household income using US census data filtered by the screening criteria (a market-sizing flyover survey was used to filter the US census data). The data have a margin of error of ±1.55% at the 95% confidence level. Escalent will supply the exact wording of any survey question upon request.

To learn more about the DC Participant Planscape™ report, click below.

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