Millennials Eschew Retirement Plans for Online Brokerage Accounts

Why are millennials snubbing defined contribution retirement plans and stashing their money into taxable brokerage accounts instead?

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Comments (3)
Impatience" and possibly............."Greed" ?

Sorry. These are two unattractive words, but as I read the article, those are the two words that popped into my mind.

For the past 2 years I've been hanging out at a local Starbucks with my laptop/tablet and over time befriended several dozen regular customers, as well as the employees here.

Its a Starbucks with an unusually high concentration of Millennials.

Through casual conversations, I've gotten to know a deeper side of my new Starbucks Millennial family, and one thing they all have in common: They want riches now and they're not patient. They're not looking at the long term BIG picture.

I'm not doing a scientific study here, but many I'm speaking to (here at the Starbucks) have accounts at Wealthfront, Betterment and Motif. They're plowing their money here, trading, and hoping for financial freedom, not seeing the power of 50-cent on the dollar employer matches.

Impatience? Greed?
Posted by MARTY M | Saturday, April 19 2014 at 7:33AM ET
[not seeing the power of 50-cent on the dollar employer matches.] ...

And if I may add, 30 cents on the dollar IRS match! In the short run or in the long run, this is a darn good return.

Its the "instant gratification" evil brought in by the "mouse" click ... click.

Kamal R.
Posted by Kamal R | Monday, April 21 2014 at 5:26PM ET
I am a millenial-age financial planner and actually have a number of millenial clients. I have asked all of them what retirement means to them and most of them respond that they don't even plan to retire, they just want to find something they love to do so they'll want to do it their whole lives. Not one of them has any intention of striking it rich as their main goal. This article says it right at the beginning - we want greater control and work life balance and if we have that, we will work forever.

We have seen our parents lose half their retirement savings in the wake of the 2008 crash and huge companies get crushed and cease to exist. Being loyal to a job and a company for 30 years and retiring with a pension is a thing of the past. The notion of "quitting" work all together once you reach a certain age is gone.

Many of my clients are also simply not informed - when I go through 401k plans and tell clients about an employer match, they sign up immediately. I also often advise millenial age clients on the value of a Roth IRA at their age (so the tax deduction conversation is a moot point), and that once their emergency fund is fully funded (priority #1), they should start socking money away for the future. And this is not so they can "retire," this is so they can enjoy tax free income when they are getting older and will want more freedom and security to keep doing what they love to do. I also think companies like Wealthfront and Betterment make investing more friendly and accessible for people who haven't amassed a huge amount of wealth, don't know too much about investing, and want to participate in the markets.

We aren't impatient, greedy, or constantly seeking instant gratification. We just look at how we want to build our wealth and our legacy differently than previous generations.
Posted by Pamela C | Thursday, May 01 2014 at 1:57PM ET
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