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How A 401(k) Might Be The Best Way To Recruit The Younger Working Generation

November 8, 2021, by New City Insurance

401k retirement plan conceptMany people that are part of a younger working generation have not started to build a nest egg for their future. In fact, just 39 percent of adults now saving for retirement began in their 20s, according to a report published by Morning Consult. The report also revealed that half of adults between the ages of 18 and 34 are not saving for retirement at all.

The reason for this lack of retirement funds is not necessarily that the younger working generation does not want to save, but rather that they do not have access to or are not eligible for an employer-sponsored retirement plan. Learn why many younger workers do not have sufficient retirement savings and why a 401(k) can be an effective recruitment tool.

Lack Of Access To 401(k) Retirement Plans A For Younger Working Generation

It is a common misconception that millennials do not generally participate in retirement plans due to a lack of interest or affordability. The younger working generation indeed faces more financial obstacles compared to decades past, such as climbing student loan debt and a recovering economy. However, one of the most common reasons that millennials do not save for retirement is that they are not eligible to participate.

The reason for ineligibility relates to the number of hours that millennials tend to work. Many younger employees only work part-time, often making them ineligible for retirement benefits.

Businesses may also have other stipulations in place for eligibility, such as maintaining a position at the company for a certain amount of time—for instance,one year. When employees do not meet these eligibility requirements, they may be denied coverage.

Attracting Millennials With A 401(k) Retirement Plan

A 401(k) plan is a popular type of retirement plan commonly offered by employers. What makes this retirement savings option so appealing is that it offers unique tax advantages to the account holder.

Employees who choose to participate in their company’s 401(k) program agree to have a percentage of their paycheck transferred directly into an investment account. Employers can decide to match all or part of each employee’s contribution. Employees have the chance to select from a variety of investment options, such as mutual funds.

women knowing A 401(k) Might Be The Best Way To Recruit The Younger Working GenerationIn recent decades, many employers have moved away from the risk and responsibility of traditional pensions. With a 401(k) plan, this risk is shifted to the employee. Employers offer employees a selection of investments to choose from, such as target-date funds, that can help reduce the risk of investment losses as employees approach retirement age.

Investments may also include guaranteed investment contracts (GICs) that are issued by insurance companies. It is also important to remember that 401(k) plans have contribution limits that often change from year to year.

401(k) Retirement Programs And Current Trends

There are certain elements of 401(k) retirement plans that are attractive to millennials, including the rollout of innovative digital trends. One such trend is auto-enrollment where eligible employees are automatically enrolled into the 401(k) program offered by their employers.

According to a Vanguard analysis that looked at 1,900 401(k) plans with approximately 3.9 million participants, participation rates in 401(k) plans were 30 percent higher with automatic enrollment compared to plans without it.

Many modern 401(k) retirement plans also offer auto-increase features as well. With auto-increase, employee contributions are automatically increased whenever the employee receives a pay raise.

Research by Bank of America showed an increase of 153 percent for 401(k) plans that offered both auto-enrollment and auto-increase features. Millennials tend to be highly tech savvy and enjoy the ease and convenience of having these important elements of their retirement savings plan handled without manual input.

Why Offer A 401(k) Retirement Plan To A Younger Workforce?

Employers are discovering the value of offering 401(k) retirement plans to their younger workforce. Recruiting millennials can often be tricky and many companies struggle with retaining young workers. It is no longer wise to only highlight salary compensation when recruiting new employees.

Millennials are looking for more in the form of monetary benefits like health insurance and retirement match programs. They also seek nonmonetary benefits, such as job flexibility and vacation policies.

employee holding a 401k wooden blocksEmployees can enjoy a wide range of advantages when they participate in an employer-sponsored 401(k) plan. They can enjoy the convenience of having money automatically deducted from paychecks, tax-deferred investment gains, and earnings. Employees are immediately vested with their own tax-deferred contributions.

Although there is a penalty for employees that withdraw funds from their account early, this penalty is eliminated if employees retire at any time in the calendar year that they turn 59-1/2 or older.

Request A Consultation With A Benefits Consultant

In a competitive employment market, businesses must find new ways to stand out. Offering a 401(k) retirement plan, in combination with a competitive compensation and benefits package, can be an effective way to attract a younger workforce. Contact New City Insurance today to request a consultation with an employee benefits consultant.

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Carol Zhang
Carol Zhang
04:29 06 Mar 22
As a rapidly expanding national media organization, the employee benefits strategy and administration that New City has provided us during our growth has been invaluable. They have been proactive about informing us of the different benefit strategies available to us as we grow as well as managing the additional compliance laws and reporting requirements at each stage of our growth.
Claudia Villalobos
Claudia Villalobos
20:14 03 Mar 22
New City Insurance made navigating through all the health insurances super EASY. Their documents are highly informative, professional, and easy to work with. Thank you for making the process of choosing a health plan so simple. You guys are THE BEST!
Philippe Salas
Philippe Salas
17:02 22 Feb 22
I never expected to have a good time talking to an insurance salesman, but let me tell you Brendan was quite the treat. He was very helpful explaining the options and has a wonderful sense of humor. I hope to speak with him every time I call.
Jennifer Polito
Jennifer Polito
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Super easy enrollment process. Fast and friendly customer service. If you are looking for an insurance company that is there for you every step of the way I highly recommend New City Insurance.
Rocky Salas
Rocky Salas
23:46 07 Jan 22
So friendly, I hope to speak to him again in all my future insurance needs.
Rocky Salas
Rocky Salas
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So friendly and soft spoken. I hope to speak to him again in all my future insurance needs.
Jose Brena
Jose Brena
13:20 06 Jan 22
Eric Calciano has been extremely helpful in finding and selecting the right insurance coverage for our company. With many options out there Eric assisted us on getting a low cost provider saving more than 20% than from our competitors and providing excellent coverage for our employees.
Anastasia Beaverhousen
Anastasia Beaverhousen
17:05 28 Dec 21
Signing up for insurance was quick and easy. Felicity Sundsboe
SFCC
SFCC
22:08 29 Nov 21
Jeff Stoltey and his team provide excellent customer service. Jeff has always provided my company SFCC with straightforward options. I went to a larger insurance company only to RUN BACK to Jeff at New City Insurance. I recommend them to anyone needing insurance without hesitation.
Kevin Luby
Kevin Luby
19:13 22 Oct 21
Quick, easy & informative. We were able to secure quality insurance for our small business on a tight deadline. Thanks for the help New City.
Theresa Ruybol
Theresa Ruybol
19:30 01 Jul 21
Eric was so great with us. He was very patient and kind as we are a newer smaller organization who is growing rapidly. With that said, we had made our inquiry, he had great rapid response and mostly had to wait on me. Any request that we made and/or questions we had, he was great answering and helping us understand. Then when we were ready for all documents and to move forward, Brendan helped with getting that together and the two of them worked their magic on New City's end to notify me of what was needed, assist me in that process and confirming that all was complete and approved for the coverage. I just want to say thank you all again so much, as insurance has always been confusing to me, and you all made that process go a lot smoother.Thank you
Andrea Ordendorff
Andrea Ordendorff
21:06 07 May 21
I've been working with both Clayton and Brendan for well over a year. As the purchase of our dental practice was delayed well over 14 months they both patiently supported me and continued to make themselves available. When we were officially ready to sign up they made the whole process seamless and super easy. This team is highly knowledgeable, professional, supportive, and efficient! I can't thank them enough for everything they've done.
T W
T W
22:32 30 Aug 20
I love New City Insurance. I never had a good experience dealing with insurance brokers until I started working with Brendan. He’s awesome! He is patient with me and takes the time to answer all my questions. I’m very grateful for all his help and hard work!
Mary Jane Deyette
Mary Jane Deyette
00:57 11 May 20
Jeff Stoltey is so awesome...even thru my company had only two employees, he took the time each year to research and find the best plan for us. The only reason I am leaving New City Insurance is because we no longer have any employees. Thank you Jeff
Alma Ortiz
Alma Ortiz
22:25 23 Feb 20
Brendan was awesome! I couldn't figure out how to pick my plan and he returned my call on a weekend to help me. Outstansing service!
jessica kavanagh
jessica kavanagh
19:53 13 Feb 20
Brendan was so helpful I definitely recommend him if you’re in need of good help and getting it done promptly. Thankyou so much again.
Tricia DeYoung
Tricia DeYoung
19:49 13 Feb 20
I was very thankful I inquired about this info. with Brendan. He was very helpful so I understand the benefits available much better now. Thank you Brendan.
B Bayer
B Bayer
17:43 24 Sep 19
NCI handled almost everything from start to finish. Clayton and Brendan made the plans easy to understand and walked me through the application process. They got me my ID numbers before my cards arrived so that I could keep an appointment I had already scheduled. My last broker wouldn't have done that. 5 stars!
Jessica Lehr
Jessica Lehr
03:36 07 Jun 19
Our staff was interested in a health plan, but we didn't know how beneficial a solid employee benefits package would be for our business to expand. We'd lose prospective employees because they had more options for their medical insurance which was sometimes more valuable than more pay. The New City team was amazing and gave us as many affordable options as possible so that everyone had their needs met.
Mike McClay
Mike McClay
19:36 03 May 19
My employer uses New City as their insurance broker, and I'm always amazed when I call in for assistance by how knowledgeable and attentive their staff is with my requests. Their online benefits platform makes selecting insurance plans pretty darn easy. I would highly recommend their services.
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