3 Things Millennials Are Getting Right About Retirement
Money + Markets

3 Things Millennials Are Getting Right About Retirement


Turns out the YOLO generation knows that you only get one chance at saving for retirement, too.

A new report from Wells Fargo shows that while all generations still have room for improvement, millennials are making a lot of smart moves when it saving for retirement.

The report takes a deep dive into 401(k) data and finds that millennials are beating out both Gen Xers and Boomers on these key metrics:

1. They’re more diversified: Millennials are the generation that’s most likely to have a diversified retirement portfolio, defined by Wells Fargo as having either a minimum of two equities and a fixed fund or investment in a target-date fund, and less than 20 percent in employer stock. This may be because millennials tend to be newer employees and companies have started defaulting all new workers into target-date funds.

Related: How Planning to Work in Retirement Could Backfire

2. They’re more likely to use a Roth 401(k): The biggest users of Roth 401(k)s, which allow investors to pay taxes up front on contributions but make tax-free withdrawals in retirement, are Millennials, with 16 percent of young adults opting into them, compared to just 12 percent of all plan participants. Unlike a Roth IRA, there are no income limits on Roth 401(k) contributions.

3. They’re the least likely to borrow from retirement savings. Just 15 percent of Millennials have borrowed money from their 401(k), compared to a quarter of Gen Xers and 19 percent of Boomers. Most planners advise against borrowing from your 401(k), since you’ll end up missing out on potential gains while you’re paying back the loan.