Gen X and Gen Y retirement plan participants now account for 55 percent of MassMutual's defined contribution plans in the third quarter of 2012, compared to 41 percent of baby boomer participants. Third quarter data from MassMutual shows that baby boomers still control 61 percent of assets, with Gen X and Gen Y holding a combined 31 percent of all defined contribution plan assets on MassMutual's platform.
The percentage of MassMutual's total participant assets in age-based and risk-based options reached an all-time high during the third quarter of 2012, accounting for 26.6 percent of total defined contribution plan assets under management, which is well above the industry average.
Gen Y participants (born between 1982 and 1995) led with 49.8 percent for the quarter vs. Gen X (born between 1965 and 1981) at 29.8 percent and baby boomers at 22.6 percent. Significantly, Gen X participants had the highest allocations in equities at 45.6 percent for the quarter ended September 30, compared with Gen Y savers at 32.2 percent and Baby Boomers at 38.4 percent.
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Women continue to favor age-based investments far more than risk-based options – in fact, more than 2.5 times as much – at 72 percent vs. 28 percent respectively. Men remain more evenly divided on their preferences, with about 52 percent in age-based vs. 48 percent in risk-based investments.
Average account balances for women grew 3.92 percent for the quarter vs. 4.17 percent for men, reflective of the generally more conservative investing profile of women. In terms of account balances, the gender gap continues to close, albeit at a slow rate. Average account balances for women now trail those of men by 38.4 percent, a slight improvement over a high of 40.5 percent in late 2010.
"Not surprisingly, Gen Y savers are taking full advantage of asset allocation investment options," said Elaine Sarsynski, executive vice president of MassMutual's Retirement Services Division and chairman and CEO of MassMutual International LLC. "We are so pleased to see that younger generations appear to understand the importance of starting early to save for retirement," she said.
MassMutual's percentage of participants who initiated loans in the third quarter (1.7 percent) was at its lowest level in four years and is significantly lower than the industry average. "We strive to educate participants that taking a loan from the 401(k) can have negative consequences and should be a last resort. We are very pleased that their behavior indicates they are grasping this message," Sarsynski added.
MassMutual serves approximately 1.6 million participants.
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