(Springfield, MA) – Fourth quarter 2013 data for defined contribution (DC) plans administered by MassMutual shows that Gen X and Gen Y savers (born between 1965 and 1995) are serious about saving for retirement. According to MassMutual’s data, 58.4% of total DC participants are in the Gen X and Gen Y cohort, and are continuing to gain on numbers of Baby Boomers who now account for just 38.5% of participants on MassMutual’s platform.
For 2013, the percentage of combined assets controlled by Gen X and Gen Y (34.2%) is still below that of Baby Boomers (60.2%), but that gap is gradually closing as well. At year-end 2012, Gen X/Gen Y held 31.9% of defined contribution assets compared to Baby Boomers at 60%.
Both Genders Favoring Age-Based Strategies
Investments in asset allocation funds more than doubled since 2007 and are at an all-time high at MassMutual. Overall, participants had 26.5% invested in asset allocation investments at year-end 2013, compared to 25% at year-end 2012.
Women continue to close the gap in retirement plan account balances as well as in savings rates compared to those of their male counterparts. According to the Q4 2013 data, the average deferral rate for female participants was 5.30%, up from 5.25% in Q3 of 2013. Male participants are saving at 5.67% on average, up from 5.60% in the third quarter. While the average account balance for women still trails that of men by 37.4% compared to 38.25% at the end of 2012, it continues to improve. The current level marks a significant improvement over the highest recorded gap level of 40.5% in the fourth quarter of 2008.
“We see many positive trends in our data overall, and it’s particularly gratifying to see that women and Gen X/Gen Y savers are taking such positive action steps,” says Elaine Sarsynski, executive vice president of MassMutual’s Retirement Services Division and chairman of MassMutual International LLC. “Using our exclusive PlanalyticsSM resources and data measurement technology, MassMutual and the advisors with whom we work are able to leverage these findings to help plan sponsors and participants continue to measure and improve their retirement savings outcomes,” she adds.
The vast majority (78%) of asset allocation investments for females are in age-based strategies compared to 73% at year-end 2012. Females have just 22% of assets invested in risk-based investment options. More and more men are also favoring age-based strategies vs. risk-based strategies, at 58% vs. 42% respectively, a trend common to both genders.
Importantly, two out of every three MassMutual participants who are invested in lifecycle or target date options are 100% invested in that single option, showing that these participants are using these options as intended. Also significant, 51.9% of assets for Gen Y and 31.4% of assets for Gen X are in asset allocation investments, indicative of very strong use of target date options. “We are thrilled to see such a high acceptance of asset allocation funds, as they are specifically designed to simplify the investment decisions for participants,” adds Sarsynski.
MassMutual serves approximately 2.6 million participants. For more information regarding MassMutual Retirement Services, please call your retirement plan professional or contact MassMutual at 1-866-444-2601.
Founded in 1851, MassMutual is a leading mutual life insurance company that is run for the benefit of its members and participating policyowners. The company has a long history of financial strength and strong performance, and although dividends are not guaranteed, MassMutual has paid dividends to eligible participating policyowners consistently since the 1860s. With whole life insurance as its foundation, MassMutual provides products to help meet the financial needs of clients, such as life insurance, disability income insurance, long term care insurance, retirement/401(k) plan services, and annuities. In addition, the company’s strong and growing network of financial professionals helps clients make good financial decisions for the long-term.
MassMutual Financial Group is a marketing name for Massachusetts Mutual Life Insurance Company (MassMutual) and its affiliated companies and sales representatives. MassMutual is headquartered in Springfield, Massachusetts and its major affiliates include: Babson Capital Management LLC; Baring Asset Management Limited; Cornerstone Real Estate Advisers LLC; The First Mercantile Trust Company; MassMutual International LLC; MML Investors Services, LLC, Member FINRA and SIPC; OppenheimerFunds, Inc.; and The MassMutual Trust Company, FSB.
MassMutual’s Retirement Services Division has been serving retirement plans for more than 65 years. It offers a full range of products and services for corporate, union, nonprofit and governmental employers' defined benefit, defined contribution and nonqualified deferred compensation plans. It serves approximately 2.6 million participants.