Group Benefits for Millennials
To say that millennials have a bad reputation in the media would be the understatement of the century. Millennials have come to be known as the entitled generation that wants everything now, but isn’t willing to work for it. While many baby boomers were perfectly content staying with the same employer throughout their career, millennials are known as the “job-hopping” generation, switching employers every two to three years. We’re told millennials don’t care about defined benefit pension plans because most of them won’t hang around long enough to benefit from them. But is that really true?
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A new survey from Willis Towers Watson flies in the face of these Millennial stereotypes. Millennials are increasingly looking at total compensation packages offered by employers, not just pay scale. Over half (56 percent) of Canadian millennials are willing to pay a higher amount for a guaranteed retirement benefit, compared to 65 percent of Gen X and 71 percent of boomers, according to the recent Global Benefits Attitudes Study. That’s not the only thing millennials are willing to pay more for: 36 percent are willing to cough up for dough for better health care plans (up from 27 percent in the 2013 survey).
When the different generations were asked to rank their top priorities when it comes to choosing an employer, 44 percent of millennials put pay and bonus at the top of their list, while 43 percent of boomers chose retirement benefits. While retirement benefits may not be at the top of the list for millennials, clearly based on this survey’s findings the younger generation values the stability of guaranteed retirement benefits like defined benefit pension plans.
Your Financial Priorities Depend on Your Life Stage
Millennials putting pay and bonus ahead of retirement benefits shouldn’t come as a shocker. It all comes down to where you are in life. Boomers are close to or have already retired, so retirement benefits are most important to them. (Hopefully they have burned their mortgage in their golden years.)
Millennials on the other hand are concerned about the here and the now. They’re dealing with heavy debt levels and stagnant wages. How are they going to repay their record-level of student debt? How are they going to afford skyrocketing home prices? While there’s no denying the benefit of a gold-plated pension plan, that won’t help millennials afford homes in cities like Toronto and Vancouver; pay and bonus will.
Retirement Benefits Still Matter
That being said, it’s important for millennials not to completely lose sight of retirement benefits. When considering a job offer, like your boomer parents, look at the total compensation package. While pay and bonus are important, also consider retirement benefits and health benefits.
If your employer offers matching of any kind, take advantage of it. For example, many employers offer matching contributions up to a percent of your annual salary, say five or six percent, for RRSP or defined contribution plans. Even if you’re strapped for cash, struggling with student debt and to save towards a home, it’s hard to beat the guaranteed rate of return of matching.
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This same advice goes for boomers. Take full advantage of your retirement benefits – it’s hard to beat a guaranteed rate of return.