Born between 1985 and 1995*
Our APERS active membership spans the current variety of generational groups such as “Baby Boomers,” “Generation X,” and “Millennials.” Every age has unique features, challenges, and opportunities.
The Millennials challenge:
Millennials have higher rates of student loan debt, poverty, and unemployment yet enjoy lower wealth and personal income compared to Gen X and Baby Boomers when they were in the 20-35 age range. To complicate matters, a Gallup report concluded that millennials are more likely to hop between jobs than their predecessors.
The goal: Keep retirement in mind. Even though retirement seems too distant for many Millennials to consider now, they should assess retirement benefits when changing jobs. The earlier employees begin to plan for retirement, the greater odds are that they’ll be in a better financial position when they are ready to retire.
APERS suggests: APERS has over 700 participating public employers across state, municipal, county and non-state government. When hopping between jobs, Millennial APERS members should consider other APERS-participating employers so that they can continue accruing retirement benefits under this system. By continuing participation in APERS, they can increase their service credit and possibly their compensation which are two key factors in the benefit formula (see article on facing page for more information on increasing APERS benefits).
When Millennials’ career plans include relocating outside of Arkansas and they opt for a termination refund, they should remember that they can roll their contributions into an employer plan or an IRA. With this distribution option they can retain their retirement benefit while still deferring taxes on their contributions. In contrast, when they request a lump sum paid directly to them, not only do they lose all future benefits for that period of employment, but they also pay a total of 25% in federal and state taxes and possibly additional penalties for early withdrawal.
*Birth year ranges for generational titles from “Minding the Generation Gap: Investigating Media Portrayals of Millennials and ‘Gen Z’ by Logan Casey, New York Times, October 31, 2016. Some material for this discussion was derived from issues raised by Jennifer Brown of the National Institute on Retirement Security as reported by Kara Stiles of Forbes.
Generational Retirement Issues, Part 1: Baby Boomers (Born between 1945 and 1964)
Generational Retirement Issues, Part 2: Generation X (Born between 1965 and 1984)