Millennials have no clear route to future prosperity because of a changing economic and social landscape. As this uncertainty looms, financial service providers can play a critical role in joining the dots between where things are now and a prosperous retirement.
It is particularly important to improve retirement and wealth outcomes for female Millennials, who, even at the age of 25, have smaller superannuation account balances than their male counterparts.
“The superannuation balance difference is something that plays out over the course of their lifetime, but we are already seeing a difference in people as young as 25 in the contribution to super,” Emergent chief executive Holly Ransom told delegates at the Women, Super and Wealth Summit in Sydney on April 27, 2017. “We need to think about how to challenge the mechanisms, the way we communicate, and the structures with which we seek to engage them.”
The challenges are stark.
Only 6.5 per cent of Millennials have a plan for retirement, less than one-third read their superannuation statements and 40 per cent do not know their balance.
By 2025, 66-75 per cent of the Australian workforce will be Millennials – a figure driven largely by the retirement of baby boomers.
Concurrently, the traditional 9-to-5 job with employer-contributed superannuation is disappearing. One-third of Australians are already freelancing and the number of portfolio careers is set to rise dramatically over the next decade.
“People don’t have this linear pathway anymore,” Ransom said. “We are going to see people take lots of twists and turns, and structure a career in whatever way they can pull it together to support and provide for themselves.”
And without compulsion, it will be only engaged individuals who contribute to their superannuation account. This could lead to large numbers of people being deprived of a prosperous future unless financial services adapt and meet the changing needs.
“We need to question some of the ways we are working now and what it would take to respond and seize the opportunity that this next generation presents,” Ransom said.
Investment Magazine was the official media partner of the Women, Super and Wealth Summit 2017. The Summit was jointly presented by the SMSF Association and Financial Services Council, with the support of the Commonwealth Bank.