How To Compete on Benefits for Millennial Talent in 2025
Millennials are leading the charge in reshaping retirement, but not in the way you might think.
A recent survey by Edelman of people over 30 found that 37% desire a retirement lifestyle that looks different from previous generations. The most popular shift? A retirement that allows them to be more active and adventurous —think less 'Golden Girls' and more 'Anthony Bourdain’—adventure, passion projects, and financial security all rolled into one.
As Michael Liersch, head of advice and planning at Wells Fargo, puts it, “the end game might not be no longer working and sitting on my Adirondack chair.”
Unfortunately, a large share of millennial employees aren’t even on track to support their current lifestyle in retirement, let alone an upgraded one. Even when retirement savings options are available, many fall short.
For businesses, this means the new way to compete on financial wellness benefits and actually take care of employees isn’t just a 401(k).
For the first time, more than half of private-sector workers are actively participating in 401(k)s.
This is a major shift from the days of pensions—where employers shouldered most of the retirement savings burden—driven by state mandates, expanded federal tax incentives, and the widespread adoption of automatic enrollment. With competition for talent heating up, the number of 401(k) plans is expected to hit 1.1 million by 2029, with much of this growth coming from small businesses.
Partial Benefits Aren't Cutting It
To understand why, let’s dig into an example of a 35 year old employee, Emily. According to GOBankingRates’ analysis, Emily likely spends about $4,793 each month living in Texas, which is pretty middle-of-the-road compared to other states.
Even though U.S. life expectancy has surprisingly decreased in recent years (currently 76, with 'healthy life' expectancy at 63), let’s be optimistic. Emily lives an active lifestyle, so let’s say she’ll get to 85.
If she wants to retire at 70, she’ll need a nest egg of roughly $1 million to $1.6 million to maintain that lifestyle for 15 more years, assuming partial coverage from Social Security*.
The average 401(k) balance for a person Emily’s age is $74K, but that’s only half the story. Half of elder millennials have less than $35,537 saved for retirement.
Playing Catch-Up
“Their net worth is going up, but they don’t feel like they are getting ahead”
Assuming Emily has $30K saved, or about $155 per month since she was 25, that money will “grow” to roughly $463K by age 70—still $587K short of what she would need to support her current lifestyle*.
To catch up, she’d have to nearly double her contributions to about $300/month. If she wants to retire at 62, she’d need to contribute around $665/month.*
Why the 401(k) Isn’t Enough Anymore
In addition to mortgages, car payments, and childcare costs that have outpaced household income, student loan debt is a huge barrier to building savings.
A quarter of employees who have access to a retirement plan but don’t participate say student debt is the reason why.
A 2021 paper by the Center for Retirement Research at Boston College found that, for their income, millennials ages 34 to 38 have a lower-than-expected net worth compared to previous generations. Their net-wealth-to-income ratio of 70% is much lower than the 110% and 82% for Gen X and late boomers, respectively, when they were the same age. The culprit? Student loans.
“Their net worth is going up, but they don’t feel like they are getting ahead,” said Bera Daigle, a certified financial planner and member of CNBC’s Advisor Council.
It’s like trying to fend off a pack of ghouls in Fallout while also daydreaming about rebuilding a cozy little vault settlement—except the ghouls (your student loans) are attacking now, and the settlement (retirement savings) is just a hopeful idea for the distant future.
How Business Owners Help – And in Turn – Compete
Recent legislative developments, like the SECURE 2.0 Act, aim to help employees manage both student debt and retirement savings.
Under this new legislation, if employees are making payments toward their student loans, employers can match those payments by contributing directly to their retirement accounts—even if employees aren’t putting cash into the retirement plan themselves.
Beyond student debt support, companies are shifting toward a holistic financial wellness approach to create a culture where employees feel they can give their all today and not fret too much over their financial future.
Offering personal finance education on paying down high-interest debt (hi, credit cards), building an emergency fund, and contributing something—even a little—to retirement accounts can help employees make informed decisions and balance savings goals with debt repayment.
And let’s be real: millennials and Gen Xers don’t exactly dream of spending their golden years playing bridge at the community center while waiting for the early bird special at Denny’s.
Now? “It’s really more about flexibility,” Daigle says, “and there’s a lot more emphasis on choosing the work they want to do in their 60s.”
Employees need to be able to visualize their financial future, which is why “retirement” is often rebranded as “financial independence” across social media.
In the end, financial wellness benefits aren’t just about helping employees retire at 65; they’re about giving them the power to make choices about their lives before then. And for millennials and Gen X, that’s the kind of independence that really matters.
*You can see all the assumptions and math that went into this sample scenario here.