Benefits March 4, 2016

Growing Millennial Generation Reshapes Health Care Consumption

Just like the Baby Boomers and Gen Xers before them, Millennials are slowly reshaping basic assumptions about the workforce and employer-provided health benefits. 

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New research from Aon Hewitt presents some impressive figures about the U.S. Millennial generation, expected to represent 70 million workers by 2030.

Each year Aon Hewitt teams up with the National Business Group on Health and The Futures Company to poll more than 2,300 U.S. consumers, leading to the “Consumer Health Mindset Study,” now in its fifth annual edition.

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According to Aon Hewitt, the substantial research effort clearly shows Millennials view integrated health and wellness programs as an important attraction and retention tool for employers. In addition to an employer focus on physical and mental/emotional wellness, Millennials further ranked “social wellbeing” in the top two areas for employer support and resource allocation—more than any other generation.

Millennials are also looking for the traditional health care and retirement planning services their parents’ and grandparents’ generation demanded. In fact, more than half of Millennials (52%) said they believe health and wellness programs offered by their employer make them feel better about their company, compared to just 39% of all other generations.

Countering a narrative often applied to Millennials and the world of workplace health care post-Affordable Care Act, a sizable group (43%) of Millennials said their employer health and wellness programs are “one of the reasons they stay at their job,” compared to less than one-third (32%) of all other generations. Offering a bit of advice to HR, 56% of Millennials said integrated health and wellness programs “would make their employer more attractive to future employees,” and 57% said it would help increase their overall satisfaction with their employer. This compares with 43% for all other generations, Aon Hewitt notes.  

NEXT: Millennials want direct guidance from employers 

The Aon Hewitt report goes on to explain that Millennials are “growing increasingly tolerant of direct guidance and consequences for unhealthy behaviors.” 

A pretty solid majority (56%) of Millennials even said employers should “direct participants to certain facilities/providers for the most appropriate care/cost.” Older generations are clearly more skeptical of this, with just 40% agreeing with that statement.

Even more striking, nearly one-third (32%) of Millennials are supportive of employers imposing consequences for “less-than-healthy conditions,” compared to just 21% of Gen Xers and 14% of Baby Boomers. On a related poll question, 32% of Millennials said they are supportive of requiring higher employee costs for health insurance if employees do not use health awareness tools, compared to just 24% of Gen Xers and 16% of Baby Boomers.

Probably not surprising, Aon Hewitt finds Millennials are more likely to rely on social media networks for health care advice. Millennials show a “great reliance on their social network of family and friends to influence their health actions (41%), compared to 33% of Gen Xers and 23% of Baby Boomers,” the report concludes.

The paper can be downloaded here after a quick registration. 

Data and Research March 3, 2016

Demographic Disparities in Retirement Assets Growing

Disparities by income, race, ethnicity, education, and marital status are growing, a report says.
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“The State of American Retirement,” a paper from the Economic Policy Institute, looks at the retirement prospects of working-age families, focusing especially on retirement account savings.

According to Monique Morrissey, an economist with the Institute, retirement wealth has grown nearly twice as fast as income since 1989, an initially encouraging picture. In 2013, the author examined increasingly inadequate savings and retirement income.  

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Aggregate retirement wealth (assets in pension funds plus savings in retirement accounts) nearly doubled as a share of personal disposable income between 1989 and 2014, even as rising inequality worsened retirement insecurity for most families, Morrissey says.

A more finely shaded look shows that retirement account savings have exceeded defined benefit (DB) assets since 2012, as well as briefly in the late 1990s and mid-2000s. The rise of retirement accounts for individuals is significant since these account assets are more affected by economic downturns than pooled pensions. Contributions are voluntary, and funds may be withdrawn in hard times. In addition, individual retirement account investments are less diversified and investment returns more volatile.

That shift away from traditional pensions has widened retirement gaps, Morrissey contends, and disparities in retirement savings balances have increased. High income, white, college-educated and married workers participate in DB plans at a higher rate than other workers. Participation gaps are much larger under defined contribution (DC) plans.

Economic downturns increasingly have a negative impact on workers’ retirement prospects, according to Morrissey’s findings. Much of the 401(k) era coincided with rising stock and housing prices that propped up family wealth measures even as the savings rate declined. This economic situation reversed in 2000 and 2001, when the tech stock bubble burst, and again in 2007 to 2009, with the financial crisis.

NEXT: How the financial crisis affected retirement savings

In 2013, most families still had not recovered their losses from the financial crisis and Great Recession, let alone accumulated additional savings for retirement. Using data from the Federal Reserve Board’s Survey of Consumer Finances, Morrissey shows a widening gap between the retirement haves and have-nots since the recession.

Nearly half of working-age families have nothing saved in retirement accounts, and the median working-age family had only $5,000 saved in 2013. Meanwhile, the 90th percentile family had $274,000, and the top 1% of families had $1,080,000 or more. These huge disparities reflect a growing gap between haves and have-nots since the Great Recession as accounts with smaller balances have stagnated while larger ones rebounded.

One issue: participation in retirement savings plans is highly unequal across income groups. In 2013, nearly nine in 10 families in the top-income fifth had retirement account savings, compared with fewer than one in 10 families in the bottom-income fifth.

Morrissey concludes that savings and retirement income for successive generations of Americans are increasingly inadequate, and that disparities by income, race, ethnicity, education, and marital status are also growing. By some measures, women are narrowing gaps with men, but still remain more vulnerable in retirement because of lower lifetime earnings and longer life expectancies.

“The State of American Retirement” can be downloaded from the website of the Economic Policy Institute, an independent, nonprofit research group that analyzes the impact of economic trends and policies on working people in the U.S. 

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