Advisor Advocate Logo: A Financial Services Blog from Nationwide
About the blog

Financial advice for working millennials

NOV. 28, 2018

On average, employees start saving for retirement at age 31.1 If those employees consistently save until they reach social security’s normal retirement age, they’d have about 35 years of asset accumulation and potential investment earnings at retirement. However, if they started saving for retirement eight years sooner, they could have significantly more available for retirement income. The delay in saving for retirement can be broken down into three factors. If employees are aware of these factors and overcome the impediments, they can help guarantee their retirement future.

Impediments to employee saving

In general, three factors cause Americans to delay saving or saving more for retirement: debt, rising costs and lack of access to a retirement plan.

Saving impediment 1: Debt

61% of employees say debt has negatively impacted their retirement savings.2 At the end of the second quarter of 2018, total consumer debt was $13.29 trillion, roughly $52,000 per adult in America.3 Two-thirds of employees hold non-mortgage debt which include:

Student loan debt

Americans owe more than $1.48 trillion in student loan debt. Spread out among about 44 million borrowers, student debt is about $37,172 per borrower.4

Credit card debt

U.S. credit card debt has reached $1.03 trillion or roughly $5,234 per card holder.4

Saving impediment 2: Rising costs

In general, costs for big ticket items are rising faster than the overall inflation rate. For example, homes cost more. In the first quarter of 2018, the median sales price of existing homes was up 5.8% over the same period of the previous year.5

Home Purchases

Rising interest rates and home prices have driven up mortgage rates and depressed affordability. Many potential buyers are also renting longer which is causing rents to rise at the fastest pace in two years.6

Child care

According to a new survey, child care is unaffordable for more than seven in 10 American families. For those who can afford it, costs are jumping. The national average weekly costs of daycare for one infant is $211, up 11.8% from 2013.7

Health care

The costs keep rising. A typical American family of four insured by the most common employer-sponsored health plan can expect to spend more than $12,378 on health care premiums and out-of-pocket expenses in 2018, an increase of $693 from 2017.13 The trend for employer medical costs for 2019 appears to be about a 6% increase, the same as 2018.9

Saving impediment 3: Limited retirement plan access

Of full-time employees in America, one in four full-time employees do not have access to a retirement plan at work.10 This also includes that two-thirds of small businesses do not offer a retirement plan.11 In addition, younger employees are twice as likely than their elders to work part-time or in a gig economy, moving from contract to contract, making them ineligible for many employer sponsored retirement plans. Research shows that roughly half of Millennials have a job tenure of one year or less.

Actions employees can take now

Start saving

Virtually all employees who are not already doing so, should start contributing to a retirement plan immediately.

Prioritize retirement saving with loan repayments

Employees may be able to reduce their student-loan payments, accept a slightly later pay off and contribute the difference to their retirement savings account — allowing compounding a more time to work.

Prioritize retirement saving with saving for a home

Individuals could reduce their monthly saving for a down payment and contribute the difference to a retirement account. Doing so would delay reaching the down payment, but potentially only by several months rather than several years. Meanwhile, the saver would kickstart their retirement savings.

Save for future healthcare expenses

Employees may have access to a Health Savings Account (HSA) which allows for pre-tax contributions to pay for qualified health care expenses that insurance doesn’t cover now or in the future. HSAs offer a triple-tax advantage: tax-free employee contributions12, tax-free investment growth and tax-free withdrawals for qualified medical expenses.

Take advantage of 401(k)automatic enrollment features

Studies suggest that automatic enrollment could reduce the national 401(k) plan non-participation rate from about 30% to less than 15%, significantly increasing employees’ retirement savings. Perhaps that’s why roughly 68% of retirement plans now use automatic enrollment, up from 58% in 2015.13

Actions your Plan Sponsors can take

Employers should

  • Establish a retirement plan
  • Promote their retirement plan
  • Educate on the advantages of saving through the plan
  • Take advantage of educational and promotional resources offered by Nationwide
  • Make it easy for employees by incorporating auto- features in the plan

Savings for the future can be difficult given all the obstacles in today’s world. You have the power to help your clients navigate these obstacles and help prepare their employees for the future.

Help your clients navigate their employees’ savings obstacles.

Check out our first edition of America’s Retirement Voice: Smart financial moves in your 20s and 30s.


  • 1

    Nationwide Participant Solutions Research Study (2017).

  • 2

    “Only 31 Percent of American Workers with Non-Mortgage Debt Save for Retirement Outside the Workplace” LIMRA (April 2018).

  • 3

    Household debt and Credit Report”, Federal Reserve Bank of New York (2018).

  • 4

    “A Look at the Shocking Student Loan Debt Statistics for 2018,” Student Loan Hero (January 2018).

  • 5

    “Metropolitan Median Area Prices and Affordability” National Assoc. of Realtors (July 23, 2018).

  • 6

    “Rents are rising at the fastest pace in almost two years,” CNBC (March 2018).

  • 7

    “This is how much child care costs in 2018,” (July 2018).

  • 8

    “2018 Milliman Medical Index,” Milliman Research Report (May 2018).

  • 9

    “Medical cost trend: Behind the numbers 2019,” PwC Health Research Institute (June 2018).

  • 10

    “Let’s give workers a retirement savings plan at work,” Brookings Institute (March 2017).

  • 11

    “2017 Small Business Owners Survey,” Nationwide (May 2017).

  • 12

    Contributions are not subject to federal income taxes when made but could be subject to state income taxes in some cases.

  • 13

    “More Companies Automatically Enroll Workers in Retirement Plans,” AARP (October 2017).

  • *

    The information provided herein is general in nature and should not be construed as legal or tax advice, as such opinions can be rendered only when related to specific situations.

  • **

    Neither Nationwide nor its representatives give investment, legal or tax advice. Please consult with an attorney or tax advisor for answers to your specific questions.