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Aon Hewitt Shows Millennial Workers Not Saving Enough to Receive Company Matching Contributions
Leaving Matching Contributions on the Table Can Cost Young Workers in Retirement

LINCOLNSHIRE, Ill., Nov. 17, 2014 /PRNewswire/ -- While participation in employer-provided 401(k) plans is strong among younger workers, data from Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE: AON), reveals many workers in their 20s and 30s are not saving enough to take full advantage of their employer's 401(k) match—potentially leaving thousands of dollars on the table and negatively impacting their long-term financial health.

Aon Corporation ( is a leading provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting. There are 37,000 employees working in Aon's 500 offices in more than 120 countries. Backed by broad resources, industry knowledge and technical expertise, Aon professionals help a wide range of clients develop effective risk management and workforce productivity solutions.

Aon Hewitt's analysis of more than 3.5 million employees eligible for defined contribution plans, shows that while the average participation rate of young Millennial workers (age 20-29) is 73 percent--and slightly higher (77 percent) for older Millennials (age 30-39)—many are saving at a low rate. Nearly 40 percent of 20-29 year olds and 31 percent of 30-39 year olds are saving at a level that is below the company match threshold.

"Automatic enrollment has significantly improved participation in 401(k) plans for all employees over the past 10 years—but even more so for young workers," said Rob Austin, director of Retirement Research at Aon Hewitt. "However, once they're in the plan, young workers seem to fall victim to inertia with many continuing to save only at the default rate, or slightly above, and risking their long-term savings by not receiving the full employer matching contributions that are offered."

Leaving matching contributions on the table can cost young workers a significant amount of long-term savings. Consider a 25 year old worker who makes $30,000 annually and works for an employer that provides the typical company match--$1-for-$1 up to 6 percent. If that 25 year old starts saving the full match amount of 6 percent immediately upon employment and continues to do so until she reaches age 65, she'll have more than $950,000 saved in her 401(k).  

If that same worker waits until age 30 to begin saving 6 percent, she will have less than $715,000 saved at age 65. Five years of missed contributions will cost her $225,000 over her career. In order to make up the gap, she would need to increase her savings by 4 percent and start saving 10 percent of pay each year for the next 35 years.1

"For young workers, it may seem insignificant to increase 401(k) contributions by a few percentage points—particularly at a point in their career and life when they're likely earning a smaller salary—but the long-term effects can be remarkable," explained Austin. "Employers can help Millennials improve their financial outlook by encouraging them to save at least at the match threshold through targeted communications and online tools and resources. To take it a step further, they can also increase the default contributions so that workers are saving at the match threshold immediately upon enrollment into the plan, or by offering automatic contribution escalation, which increases a workers' contribution rate over time. The bottom line is young workers need to save more, starting now."  

Investment Behavior of Millennials
Many Millennial workers are using premixed funds (target-date, target-risk, and diversified investments) and are therefore more heavily invested in equities than older workers. Workers age 20-29 year olds have 83 percent of their balance allocated to equities, while 30-39 year olds have 76 percent of their exposure to equities. 

"Younger workers benefit from having a longer time horizon in which to invest and therefore can take more risk with their investments," said Austin. "It is also not surprising to see so many Millennials using premixed funds since they are the default investment portfolio for the majority of plans."

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About Aon Hewitt
Aon Hewitt empowers organizations and individuals to secure a better future through innovative talent, retirement and health solutions. We advise, design and execute a wide range of solutions that enable clients to cultivate talent to drive organizational and personal performance and growth, navigate retirement risk while providing new levels of financial security, and redefine health solutions for greater choice, affordability and wellness.  Aon Hewitt is the global leader in human resource solutions, with over 30,000 professionals in 90 countries serving more than 20,000 clients worldwide.  For more information on Aon Hewitt, please visit

About Aon
Aon plc (NYSE:AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 66,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world's best broker, best insurance intermediary, best reinsurance intermediary, best captives manager, and best employee benefits consulting firm by multiple industry sources. Visit for more information on Aon and to learn about Aon's global partnership with Manchester United.

1 Figures assume 2 percent pay growth and a 7 percent annual interest rate.

Media Contact:
MacKenzie Lucas, 847-442-2995,
Maurissa Kanter, 847-442-0952,

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