Jonathan Bell Lovelace believed that fundamental research is essential to achieving superior long-term investment results. The small company he founded in 1931 has grown into one of the world’s most respected financial institutions.
Millennials Demand More From Employers and Investments
When comparing generations, new Capital Group survey finds that Millennials:
LOS ANGELES, August 29, 2017 — Nine out of 10 Millennials are saving for retirement, according to a survey of 1,200 investors issued today by Capital Group, home of American Funds® and one of the world’s leading investment management firms. When it comes to their choices of employers and investments, compared to Baby Boomers, Millennials are looking for new workforce benefits and companies that deliver financial and social value.
“Millennials are now the largest generation of working Americans, and their attitudes on work, investing and retirement will shape our future,” said Heather Lord, senior vice president and head of strategy and innovation at Capital Group. “Millennials grew up as digital natives, and they are now the new workforce natives — exploring a very different labor market than generations before them and seeking benefits that align with their lifestyles and values. A 401(k) is table stakes for a Millennial jobseeker; they want new and advanced job benefits from employers like tuition reimbursement and a 529 college savings plan.”
Millennials Challenge Workplace and Investing Norms
Eighty percent of Millennials believe that all employers should be expected to provide a retirement savings option, compared to 71% of Boomers. All three generations surveyed (Millennial, Baby Boomer and Generation X) agree on the top three “must-have” benefits: health insurance, a matching 401(k) plan and vacation time. Where employers can differentiate themselves is by helping with the cost of education. One in three Millennials (34%) say a 529 or college savings plan is a benefit they want employers to offer. Even more want tuition reimbursement (37%). This aligns with a key worry for Millennials: 31% say not having enough money to pay for their children’s education keeps them up at night.
Ninety-one percent of Millennial investors surveyed are contributing to a 401(k) or IRA, and 83% say it’s easy to transfer retirement savings from their prior plan. That’s good news since they change jobs often and embrace nontraditional career paths. Two-thirds of Millennials have held at least two jobs in the past five years — including 30% who have held three jobs or more, compared to 10% of Generation Xers and 6% of Boomers. Twenty-one percent of Millennials say they work primarily in the gig or sharing economy, and 14% earn extra income through a website or app.
Millennials want their investments to do well and expect companies they invest in to drive financial performance. They also rate social impact factors 13 percentage points higher than Baby Boomers on average, saying that it’s important for companies to promote health and wellness of consumers and employees, help disadvantaged communities, include more women in senior management and boards of directors, and promote economic opportunity for women, minorities and LGBT individuals.
“By the time Millennials entered the labor market, long-term job security and traditional pensions were ancient history,” said Lord. “Millennial investors understand they need to take charge of saving for their retirement early in life, and they also demand more than older generations when it comes to their choices of employers and investments.”
Key findings from the Wisdom of Experience investor survey series, include:
Investors of All Ages Agree: Five Factors Lead to a Better Retirement
All generations of investors in the survey — from Baby Boomer to Generation X to Millennial — agree on the top five factors that create a safe path to a better retirement:
1. Saving a portion of monthly income toward retirement
2. Building a diversified portfolio
3. Pursuing a consistent investment strategy based on long-term objectives
4. Protecting savings and investment gains from market downturns
5. Investing in funds that do better than the stock market over the long term
Additional findings from this survey will be released throughout the year as part of Capital Group’s Wisdom of Experience investor survey series.
For additional information and the full report, click here
About Capital Group
Since 1931, Capital Group, home of the American Funds, has been singularly focused on delivering superior results for long-term investors using high-conviction portfolios, rigorous research and individual accountability. Today, Capital Group manages more than $1.4 trillion in equity and fixed income assets for millions of individual and institutional investors around the world.*
The Capital Group companies manage equity assets through three investment groups. These groups make investment and proxy voting decisions independently. Fixed income investment professionals provide fixed income research and investment management across the Capital organization; however, for securities with equity characteristics, they act solely on behalf of one of the three equity investment groups.
*As of December 31, 2016
The survey was conducted by APCO Insight, a global opinion research firm, in March 2017. The research consisted of an online quantitative survey of 1,200 American adults — 400 Millennials (ages 21–37), 400 Generation Xers (ages 38–52) and 400 Baby Boomers (ages 53–71) — of varying income levels, who have investment assets and also who have some responsibility for making investment decisions for their families. This sample reflects national representation on key demographic measures according to the U.S. Census Bureau.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the mutual fund prospectuses and summary prospectuses, which can be obtained from a financial professional, and should be read carefully before investing. Similar information about collective investment trusts can be obtained from Capital Group or participants’ plan provider or employer.
American Funds Distributors, Inc., member FINRA.