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Millennial Workers Are On Pace to Have More Retirement Income

More workers than ever are saving more toward their retirement and millennials are quickly catching up to older generations when it comes to contribution and participation rates, according to new research released by Principal Financial Group®1.

The Driving Plan Health report conducted by Wells Fargo Institutional Retirement and Trust, which was acquired by Principal in 2019, indicates all three key retirement plan health measures – participation, contributions and diversification – show significant gains over the last five years. Millennial workers in particular appear to be quickly catching up to boomers when it comes to contribution and participation rates.

“Seeing such significant growth among these critical plan health measures tells us more people depend on defined contribution plans to save for their retirement,” said Renee Schaaf, president of retirement and income solutions at Principal®. “With millennials looking to replace more of their retirement income with their DC plan accounts, we have a tremendous opportunity and obligation to help them save enough so they can have enough in retirement.”

Report highlights

  • Baby boomers are more active in workplace retirement programs. According to the report, 47% of Baby Boomers contribute to a retirement savings account versus 30% of millennials.
  • Over the last five years, participation in a defined contribution plan has grown at the fastest rate versus other plan health measures. Participation in a defined contribution plan has increased 12% from 2013 with 65% of individuals taking part in a workplace defined contribution plan.
  • Millennials are more interested in diversifying retirement investments. More millennial workers choose diversified retirement investment options at 83% versus 78% of baby boomer workers. Of those diversified, 63% of millennials have 100% of their funds in a diversified investment solution versus 45% of baby boomers. Diversified investment solutions are defined as allocations toward an all in one choice like target date funds (TDFs), managed accounts or model portfolios, or account balance in at least two equity and one fixed income asset class.

Millennials on pace to have more retirement income than previous generations
While pre-retirees2 save more now, millennial workers in the study significantly outpace their predecessors when looking at retirement income replacement projections. It is estimated pre-retirees will replace 47% of their income on average, while millennials will be positioned to replace 86% of their income.

Factors for this include:

  • Many millennials are gaining access to defined contribution plans earlier in their working life than those over 50 years of age, identified in the study as “pre-retirees”.
  • Nearly a third of pre-retirees aren’t participating in their 401(k) plans, and of those that do, less than half save at least 10% of their income, including employer match, which is estimated to replace less than half of their income in retirement.
  • Those nearing retirement may also be banking on other primary retirement income sources.
    • Nineteen percent of pre-retirees will depend on a defined benefit plan and 38% on Social Security as their primary source of income in retirement.
    • Conversely, 46% millennials expect their defined contribution plan to serve as their main source of income in retirement, compared to only 25% of baby boomers.

“Overall, we’re encouraged by the positive trends uncovered in this year’s report,” Schaaf adds. “Increases in participation and contribution rates combined with the passage of the SECURE Act should help drive momentum over the next five years.”

About the 2019 Driving Plan Health report
The 2019 Driving Plan Health report examines 4 million eligible participants in approximately 1,900 defined contribution plans with services by Wells Fargo Institutional Retirement and Trust defined contribution plans, as well as terminated participants who retained a balance in those plans. All data is as of December 31, 2018. Following the recent acquisition of Wells Fargo Institutional Retirement and Trust, Principal is pleased to announce the findings of this year’s report.

For the past five years, Driving Plan Health has explored the roles demographics, plan design, participant communications and online tools and resources play in affecting the outcomes measured by the Plan Health Index. This year, the report expanded its purview to look at how to help participants succeed not just in getting to retirement but creating an income stream in retirement.

To learn more about Principal and our retirement plan solutions, visit:

About Principal®
Principal helps people and companies around the world build, protect and advance their financial well-being through retirement, insurance and asset management solutions that fit their lives. Our employees are passionate about helping clients of all income and portfolio sizes achieve their goals – offering innovative ideas, investment expertise and real-life solutions to make financial progress possible. To find out more, visit us at

Insurance products and plan administrative services provided through Principal Life Insurance Co., a member of the Principal Financial Group®, Des Moines, IA 50392.
Principal, Principal and symbol design and Principal Financial Group are trademarks and service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.
© 2020 Principal Financial Services, Inc.

1 The material contained within was co-created by Principal and Wells Fargo Institutional Retirement and Trust (IRT). Information presented originates from existing Wells Fargo IRT client data and is shared in accordance with IRT client relationship permissions.

Principal Financial Group closed the acquisition of certain assets of the Wells Fargo Institutional Retirement and Trust business (IRT) on July 1, 2019. The transition, transfer, and conversion of IRT business operations, employees, and clients will occur over the following 12-24 months. During the transition period, Wells Fargo Bank, N.A., a bank affiliate of Wells Fargo & Company, will continue to operate and service the IRT business for the benefit of Principal®, including providing recordkeeping, trustee, and/or custody services.

2 Participants ages 50 and older.


Media Contact: Hillary Carlson,, 515-878-1460

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