Examining U.S. Millennial Retirement Plan Participation Decisions: The Roles of Employer Contributions and Automatic Enrollment

Thomas Korankye (), Blain Pearson and Yi Liu
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Thomas Korankye: Personal and Family Financial Planning Program, University of Arizona, Tucson, AZ 85721, USA
Blain Pearson: Department of Finance and Economics, Coastal Carolina University, Conway, SC 29526, USA
Yi Liu: Department of Accounting and Finance, St. John Fisher University, Rochester, NY 14618, USA

JRFM, 2024, vol. 17, issue 2, 1-12

Abstract: This study examines how automatic enrollment and employer contribution provisions relate to the retirement plan participation decisions of Millennials using data from the 2018 U.S. Financial Industry Regulatory Authority’s (FINRA) Millennial Investment Study. The analysis controls for various factors such as total debt, household income, risk tolerance, and investable assets. The findings underscore the notion that automatic enrollment and employer contribution provisions are associated with an increased likelihood of participation in retirement plans among Millennials. The empirical results reveal that the absence of auto-enrollment, lack of employer-matching contributions, or communication inadequacies are fundamental reasons for Millennials’ non-participation in employer retirement plans. These findings have important implications for employer retirement plan design and the effectiveness of their communication strategies.

Keywords: financial decision making; automatic enrollment; employer contributions; millennials; retirement plans; retirement savings (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2024
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