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Study: Gender, generational differences found in the way people save, invest money

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A Wells Fargo study of the 401(k) plans it manages shows an outcome that proves there is some truth to the matter that men and women, as well as different generations, save and invest their money differently.

The study reveals differences in the saving and investing habits of men and women, as well as generational variations, and suggests tailoring 401(k) information to different demographics to make workplace savings plans a more powerful tool for building a retirement nest egg.

Joe Ready, director of Wells Fargo Institutional Retirement and Trust, said Wells Fargo manages 401(k) plans for employers with nearly 4 million eligible employees. Wells Fargo does not have gender information on all those workers, but where data on gender is available, the study finds differences.

For example, more men than women are taking advantage of their company’s 401(k) plan. For plans where gender data was available, about half the men, 49 percent, and four out of 10 women, 43 percent, are enrolled in their 401(k).

Ready said given the 6-point difference in participation between men and women “one of the biggest things we have to do (is look at) what might be getting in the way” of enrollment. “There may be some different messaging that's required to figure out how we get more women to enroll in these plans.”

Ready said investing is ultimately an individual decision and “the messaging needs to be very personalized and targeted to the individual circumstance.”

The study finds the millennial generation to be the biggest users of the Roth 401(k). In this option, the employee makes an after tax contribution to the 401(k), and then can withdraw money tax-free in retirement. For millennials, 15.3 percent use the Roth 401(k), compared to 10.4 percent of employees overall.

“When I see that millennials are the biggest users of the Roth 401(k) it tells me they are really thinking abut this,” Ready said. “They are thinking about their current tax situation versus their future prognosis for taxes.” Roth suggested this means millennials are deciding it would be better to pay taxes now and have access to the money tax free later on.

The survey finds that workers generally perceive the need to save for retirement. Ready said, “When we ask, ‘do you understand that you own and are responsible for your own retirement?’” People generally respond that they understand they have to take that responsibility.

Younger workers in particular “know they will have Social Security and whatever they can create on their own, and I think they have taken a lot more genuine control to understand it and to optimize it.”


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