Bank of America Merrill Lynch Report Finds Millennials Prioritizing Retirement and Health Saving Through Workplace Benefits
October 23 2014 - 10:00AM
Business Wire
Mobile Access, 401(k) Auto Features and
Personalized Advice Make Financial Benefit Plans More Valuable and
Easy to Use, Help Drive Positive Behaviors
Saving for retirement and health care expenses was a priority
for employees of all ages during the first half of 2014, according
to the latest Bank of America Merrill Lynch 401(k) Wellness
Scorecard. This semiannual report reveals trends in the behaviors
of financial benefit plan participants, along with employers’
adoption of 401(k) design features in plans serviced by Bank of
America Merrill Lynch.1 Key insights from the new report
include:
- Health savings account (HSA) usage grew
33 percent during the first six months of the year, with more than
384,000 workers now utilizing these tax-advantaged vehicles to
prepare for qualified near- and long-term medical expenses. While
Baby Boomers (38 percent) and Gen Xers (39 percent) make up the
majority of account holders, Millennials (23 percent) are also
using HSAs early in their careers.
- Millennials are also taking positive
retirement savings actions. Nearly 40,000 of these younger workers
enrolled in their employer’s 401(k) plan for the first time during
the first half of the year – a 55 percent increase from the same
six-month period last year. Across all generations, the report
found a 37 percent increase among first-time contributors.
“Seeing younger generations more vigorously engaged with
workplace savings vehicles is encouraging,” said David Tyrie, head
of retirement and personal wealth solutions for Bank of America
Merrill Lynch. “These actions represent significant steps toward
achieving long-term financial wellness in an era of rising health
care costs, increasing longevity and self reliance due to fewer
pension plans.”
Trends in employee behaviors revealed through this report are
consistent with insights garnered from Merrill Lynch and Age Wave’s
ongoing series of retirement studies. In particular, our recent
health study found that health care expenses are people’s top
financial concern for later life, which makes planning for them an
essential part of holistic retirement preparation.2 In addition,
our recent work study found that Millennials expect to rely
primarily on personal savings and income to fund their
retirement.3
Mobile participation on the rise
Employee engagement with Bank of America Merrill Lynch’s
Benefits OnLine® Mobile optimized site increased 41 percent – with
approximately 170,500 unique users accessing their benefits via
mobile device during the first half of the year, up from 120,500
during the same period last year. This further demonstrates that
participants want to receive education and information about their
benefit plans, along with tools to better manage their finances, in
a manner that reflects their on-the-go lives.
Plan sponsors often find mobile access to plan information to be
the ideal way to reach Millennials, as well as hard-to-engage
employees such as those in industries with limited access to
desktop computers. Bank of America Merrill Lynch has introduced
ongoing enhancements to its mobile benefits platform since 2012,
providing employees access to detailed information in their 401(k),
equity, defined benefit and non-qualified deferred compensation
plans through a unified mobile experience.
Employers make saving easier, automatic
Employers continue to seek proactive ways to help their
employees achieve their retirement goals and improve their overall
financial wellness. Results from the report show that:
- During the 12-month period ending June
30, 2014, the number of 401(k) plans combining auto enrollment and
auto increase grew 19 percent compared to one year early, with 213
plans now using these features in tandem.
- Nearly all employers (94 percent) that
added auto enrollment during the first half of this year also added
auto increase, compared to 50 percent during the same period last
year.
- Overall, more plan sponsors are adding
voluntary auto increase to their plans, with a 63 percent increase
in adoption of this feature during the last 12 months. And
employees are responding, as evidenced by a 27 percent increase in
the number of participants using auto increase.
- Advice Access4 is a professional saving
and investment advice service – offered online, via phone and in
person – tailored to an employee’s life stage and individual
situation. Employer adoption of this service as a resource for
their workforce increased 6 percent year-over-year (June 30, 2013
to June 30, 2014). Similarly, plan participant usage of the service
increased 8 percent during this period, to nearly 210,000 users –
34 percent of whom are Millennials, 26 percent are Baby
Boomers.
“With intuitive plan design strategies, companies are making
access to financial benefit plans and decision-making about
enrollment and contribution rates easier, and helping employees
achieve better outcomes through personalized education and advice,”
said Steve Ulian, head of institutional business development for
Bank of America Merrill Lynch. “By further integrating how
employees save for retirement and long-term health care costs,
employers can help people see a more complete picture of their
financial wellness and make informed choices.”
To access the Bank of America Merrill Lynch 401(k) Wellness
Scorecard, click here.
1 401(k) Wellness Scorecard is based on the Bank of America
Merrill Lynch proprietary 401(k) business, which comprises $128.9
billion in total client plan assets and 2.5 million total plan
participants as of June 30, 2014.2 “Health and Retirement: Planning
for the Great Unknown,” a Merrill Lynch retirement study conducted
in partnership with Age Wave, 2014.3 “Work in Retirement: Myths and
Motivations,” a Merrill Lynch retirement study conducted in
partnership with Age Wave, 2014.4 The Advice Access service uses a
probabilistic approach to determine the likelihood that
participants in the service may be able to achieve their stated
goals and/or to identify a range of potential wealth outcomes that
could be realized. Additionally, the recommendations provided by
Advice Access do not consider an individual's comfort level with
investment risk, and may include a higher level of investment risk
than a participant may be personally comfortable with. Participants
are strongly advised to consider their personal goals, overall risk
tolerance, and retirement horizon before accepting any
recommendations made by Advice Access. Participants should
carefully review the explanation of the methodology used, including
key assumptions and limitations, which is provided in the Advice
Access disclosure statement. It can be obtained through Benefits
OnLine or through your Bank of America Merrill Lynch
representative.
IMPORTANT: The projections or other information shown in the
Advice Access service regarding the likelihood of various
investment outcomes are hypothetical in nature, do not reflect
actual investment results and are not guarantees of future results.
Results may vary with each use and over time.
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