Americans are quitting their jobs in droves. In what has been dubbed “The Great Resignation,” workers are leaving their current positions in search of greener pastures.
Companies hoping to retain such employees might offer them a raise. But as it turns out, there is something workers want even more than a simple pay hike.
Two-thirds of workers who contribute to workplace retirement plans say they would rather have their employer match contributions to a 401(k) or other plan than to offer a salary increase, according to the ninth-annual Survey of Retirement Plan Participants by American Century Investments.
The desire for matching retirement funds cuts across all age groups. The share of workers in each generation who said they would prefer such a match over a salary increase is:
- Baby boomers (defined as those born in 1946-1964): 80%
- Generation X (1965-1979): 69%
- Millennials (1980-1994): 59%
A preference for an employer match over a salary bump reveals these workers share a high degree of sophistication about finances.
Unlike a salary increase, an employer match in a traditional retirement plan is essentially free money — it is not taxed upfront, and it can grow for many years before the worker will have to pay taxes on the withdrawals.
Workers appear to be especially focused on building their retirement nest eggs right now.
When asked to choose between two options — employer contributions to their retirement plan or help with educational costs (meaning saving for a child’s college education or repaying existing student loans) — an overwhelming 82% of survey participants chose the retirement contributions. Just 12% preferred help with educational costs, and the other 6% had no preference.
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