Defined contribution plans and generations

April 25, 2019

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The unique life experiences of different generations may be influencing their saving and investment behavior. However, automatic enrollment and the growing use of target-date funds are reshaping retirement plan outcomes across all generations. The greatest impact has been on millennials, according to a new Vanguard research paper. New employees are more likely to experience automatic enrollment, and new employees tend to be younger than long-tenured ones.

Millennials were twice as likely to use professionally managed allocations, including target-date funds, than early baby boomers. And even though millennials have lived through two significant bear markets in equities, their allocation to equities is higher than that of other generational cohorts because they are invested in target-date funds.

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