A new report suggests that defined contribution participants are feeling better about their financial situations – and that the confidence of Millennials is highest.
Defined contribution plan participants are feeling confident about the present state of their financial situations and are even more optimistic that their personal finance situation will improve over the next 12 months.
Nearly six-in-ten (58%) DC plan participants overall report that their financial situation is better today that it was one year ago, according to the Spectrem Group’s Financial Behaviors and the Participant’s Mindset report.
Across all age groups, Millennial plan participants express the most confidence about their present financial situation in comparison to the same period last year. A full 70% report their financial situation is better today, compared with:
· 57% of Gen Xers (ages 36-51);
· 52% of Baby Boomers (ages 52-70); and
· 41% of the so-called “Silent Generation.”
Half of participants with a plan balance of at least $750,000 say their present financial situation has improved over the same period last year, compared with 55% of those with a plan balance between $350.000 and $750,000 and 51% of those with a DC plan balance between $100,000 and $350,000.
Analyzing their DC plan participant research by gender, Spectrem found that both a majority of men (56%) and women (60%) participants consider their financial situations better today than one year ago.
A Bright Future?
Nor is that optimism limited to the recent past; projecting to a year from now, more than two-thirds of DC plan participants surveyed expect their personal financial situation will be stronger one year from now than at present. Nearly six-in-ten participants with a plan balance of at least $750,000 expect their financial situation will have improved a year from now. Equally confident (59%) are participants with a plan balance between $100,000 and $350,000, while those with a plan balance compared with $350,000 and $750,000 are less so; just over half think their financial situation will have improved in one year’s time.
No doubt because they are younger and at the beginning of their careers, Millennials plan participants are even more optimistic about their financial futures; 84% of participants ages 35 and under expect their personal financial situation will be better one year from now than at present. In comparison, about two-thirds (64%) of Gen Xers and Baby Boomers feel likewise.
The oldest plan participants are the least confident about where their personal financial situation will be in one year’s time – just 43% expect it will be better. Women plan participants are more optimistic than their male counterparts about where their financial situations will be one year from now; seven-in-ten think it will be better vs. 65% of men.
That optimistic view notwithstanding, less than half (40%) indicate that their household is not saving enough to meet their financial goals. Not surprisingly, plan participant concerns about saving enough to reach their financial goals decreases with plan balance. Nearly four-in-ten (38%) participants with a plan balance between $100,000 and $350,000 are concerned they are not saving enough vs. 9% of those with a plan balance of at least $750,000.
Gen X Concerns
Gen Xers are more likely than younger and older participants to be concerned that their household is presently not saving enough to meet their financial goals; 56% express this concern, compared with roughly one-fourth of Millennials, 39% of Baby Boomers and 10% of WWII generation participants. Women plan participants are more concerned than their male counterparts are not saving enough to meet their financial goals (44% vs. 34%).
Current household debt is a concern to roughly one-third of plan participants. We find that the higher the plan balance, the less percentage of those profess to be concerned about the amount of debt their household currently holds. Fifteen percent of participants with a balance of $750,000 are concerned about this, compared with 32% of participants with a plan balance of between $100,000 and $350,000.
Gen Xers also have heightened concern about the current amount of household debt – 43%, compared with 21% of Millennials, 29% of Baby Boomers and 18% of seniors.
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