Examining U.S. Millennial Retirement Plan Participation Decisions: The Roles of Employer Contributions and Automatic Enrollment

Abstract

This study examines how automatic enrollment and employer contribution provisions relate to the retirement plan participation decisions of Millennials using data from the 2018 U.S. Financial Industry Regulatory Authority’s (FINRA) Millennial Investment Study. The analysis controls for various factors such as total debt, household income, risk tolerance, and investable assets. The findings underscore the notion that automatic enrollment and employer contribution provisions are associated with an increased likelihood of participation in retirement plans among Millennials. The empirical results reveal that the absence of auto-enrollment, lack of employer-matching contributions, or communication inadequacies are fundamental reasons for Millennials’ non-participation in employer retirement plans. These findings have important implications for employer retirement plan design and the effectiveness of their communication strategies.