Why is Generation Y Ditching Retirement Plans Including the 401K?
Most of my clients embrace payroll deduction retirement plan s including the 401(k) and 403(b) which offer the benefit of tax deductible contributions and tax-deferred growth. However, once in a while I'll meet someone who prefers not to participate in these sorts of plans because they don't like the idea of giving up liquidity until they are much older. Also, tax-deferral still means paying tax when that money is withdrawn, creating a tax headache which often requires careful planning during retirement. According to research firm Hearts and Wallets, short-term goals and financial independence take precedence over traditional tax-deferred retirement savings accounts for many of the more affluent Generation Y investors.*