Data and Research August 7, 2018

LendEDU Suggests Millennial Spending Habits Won’t Harm Their Retirement

While 27% of Millennial Americans allocate more cash towards coffee than retirement savings, most save an average of $480 per month on retirement.

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In the 1980s and ‘90s, young Gen Xers allocated their money towards mortgages for white-picket fence houses, first cars, and impending retirement savings. In 2018, Millennials prefer to spend their hard-worked cash on $5 oat-milk lattes, clothes and Netflix. So, while this youthful workforce defines themselves as savers, are these expenditures harming their future years?

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A recent LendEDU study, conducted with over 1,000 Millennial Americans ages 22 to 37, revealed the correlation between day-to-day spending habits and assigned retirement savings for one month. In it, the survey found, the average Millennial spends $38 on coffee per month, but will save, on average, $480 for retirement. However, 27% of respondents expend more on coffee than on retirement savings.  

Additionally, the survey reported 49% of Millennials will spend more on restaurants rather than allocating finances towards their 401(k). The average amount spent per month on dining out? One-hundred and sixty-three dollars, the survey says. And, similar to coffee and dining expenses, Millennials are spending their money on online streaming services and events, such as Netflix, Spotify and concerts.

The study points out the importance of enjoying these social events and small pleasures. Because even though Millennials will spend more on avocado toasts and exercise, past studies report they are prepping for retirement better than previous age groups and are highly-informed health care consumers. And, they continue to manage that average $480 per month on retirement savings.

More information about the study can be found here.

Compliance August 7, 2018

Business Owner to Serve Prison Time for 401(k) Plan Embezzlement

A multi-agency investigation found that from approximately May 2011 through August 2012, the business owner unlawfully embezzled and converted approximately $31,403 in deferred contributions from employees.

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The U.S. District Court for the District of Kansas has sentenced business owner Brenda Wood to serve 50 months of imprisonment followed by an additional five years of supervised release, and to make more than $4.3 million in restitution for bank fraud and violations of the Employee Retirement Income Security Act (ERISA).

 

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Wood previously pleaded guilty to two counts of bank fraud and one count of theft from an employee benefit plan.

 

Wood owned Professional Cleaning and Innovative Building Services Inc. (PCI), a commercial cleaning services company in Kansas City, Missouri, as well as four Bonner Springs, Kansas, businesses: Commercial Development and Management LLC (CDM), Action Real Estate Services LLC, G&W Investments LLC, and Riverview Crossings LLC. In November 2010, she established the PCI Building Services Inc. 401(k) plan for the retirement benefit of employees of PCI and CDM.

 

A multi-agency investigation found that from approximately May 2011 through August 2012, Wood unlawfully embezzled and converted approximately $31,403 in deferred contributions from employee salaries. The court-ordered restitution includes $69,000 in employee and matching employer contributions, as well as lost earnings due to the 401(k) plan, and approximately $4.3 million for fraudulent loans and identity theft.

 

Wood assured employees who confronted her about missing 401(k) contributions that Nationwide Life Insurance Company held their funds in escrow when, in fact, she had already used their contributions for her own benefit without their permission, the Department of Labor (DOL) says. Wood also falsely accused her company’s accountant of embezzlement, and falsely claimed her former in-house counsel and human resources manager were responsible for the 401(k) plan. In addition, she made false statements to Farmers Bank and Trust of Great Bend, falsely claiming PCI had received a contract for cleaning services at an Internal Revenue Service (IRS) facility in Kansas City, Missouri, when the company failed to make the final round of bids. Based on her statements, the bank extended a $350,000 line of credit on which Wood submitted draw requests, stating that she needed the funds to fulfill the IRS contract.

 

“Fraudulent transactions like these have a severe impact on companies and individuals,” says DOL Employee Benefits Security Administration (EBSA) Regional Director Jim Purcell. “The actions can cause irreparable damage to the retirement savings of individuals and their future financial security.”

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