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Survey Spotlights Generational Differences in Retirement Plan Usage and Engagement

October 27 2022

Released in July, Bank of America’s 2022 Financial Life Benefits Impact Report examines trends in employee usage and engagement with workplace benefit programs, in particular 401(k) plans. This survey of its own recordkeeping plans spotlights a number of key generational differences among workers when it comes to connecting with their retirement plan benefit and utilizing plan design features.

Millennials Are Not Making the Most of the Opportunity

Millennials are the least likely to participate in a 401(k) plan (54% vs. 65% of Gen X and 59% of Baby Boomers). In addition, 70% of Millennials contribute less than $5,000 annually. That percentage is significantly higher than Gen X (54%) and Boomers (51%). And only 4% of Millennials are contributing the allowable maximum ($20,500 in 2022), compared to 12% of Gen X and 14% of Boomers. It should be noted that less than 10% of 401(k) participants overall contribute at the allowable limit.

But They Do Have Considerable Interest in ESG Investments

The research found employees have significantly increased the portion of their assets in Environmental, Social and Governance (ESG) focused investments. Overall, 15% of employees invested in ESG funds, which is a 50% increase since 2020. The average amount they have invested in ESG funds is $13,400, which marks a 30% increase since 2020.

Millennials are leading the way, with 52% investing in ESG funds compared to 32% of Gen X and just 14% of Boomers. Men make up 53% of ESG investors. Despite the interest among younger workers, only a small number of employers (11%) offer ESG-focused investment options.

Gen Z Women Closing Gender Gap in Account Balances

Overall, men have 55% more money in 401(k) balances ($108,000 vs. $70,000) than women. But interestingly, among the youngest retirement savers in the workforce, Gen Z women (up to age 26) have overtaken Gen Z men in total retirement savings, with 3% higher account balances on average. Millennial women have just 80% of the average 401(k) account balance of Millennial men, while Gen X women have 65% of their male counterparts and Boomer women have 53%.

Target Date Fund Interest and Usage is Significant Among Younger Workers

The Bank of America survey found the use of target-date funds is significant and increasing, especially among younger employees. Millennials have almost twice the amount of money invested in TDFs as Boomers. In addition, younger workers are seeking growth with higher allocations to equities. Gen X has 45% of their assets in equity-only mutual funds, followed by Millennials at 42%. By comparison, Baby Boomers have 39% of their assets investment in equity-only funds.

Automatic Plan Features: The Ageless Wonder

While the survey identified many differences among generations of workers, they all seem to agree on one thing: auto features are valued. Employee participation rates more than double when plans have an auto-enrollment feature. The survey found 84% of employees participate in a 401(k) when it has auto-enrollment, while only 37% of employees participate in 401(k) plans without auto-enrollment. When it comes to default contribution rates, 90% use a default rate of 3% or higher, while only 30% of plans use a default rate of 5% or higher. Of plans with auto-enrollment, 55% also have auto-escalation, and 96% of those increase deferrals at 1% per year.

Bank of America’s 2022 Financial Life Benefits Impact Report can be found at:

The survey utilized the following generational bands in presenting its data:

  • Gen Z (Up to age 26)
  • Millennials (Ages 27-41)
  • Gen X (Ages 42-56)
  • Baby Boomers (Ages 57-75)


Bank of America. (2022, June). 2022 Financial Life Benefits Impact Report