Workers Don’t Expect to Succeed in Saving for Retirement

A new Transamerica report considers generational differences in retirement expectations.

Most (80%) U.S. workers surveyed believe their generation has it “much harder” than their parents’ generation in achieving financial security, according to a new report published today by the nonprofit Transamerica Center for Retirement Studies in collaboration with the Transamerica Institute.

Almost seven out of 10 workers (68%) across generations feel they could work until retirement and still not save enough to meet their needs, according to “An Uncertain Future: Retirement Prospects of 4 Generations,” which examined the financial prospects of Generation Z (born from 1997 through 2012), Millennial (born 1981 through 1996), Generation X (born 1965 through 1980) and Baby Boomer (born 1946 through 1964) workers.

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Catherine Collinson, the Transamerica Institute’s CEO and president, said the most crucial ingredient for workers to achieve a financially secure retirement is access to meaningful employment that includes retirement benefits.

“Amid workforce transformations and the evolving retirement landscape, resilience is imperative,” Collinson said in a statement, adding that employees need to have the “know-how and resources to navigate an uncertain future.

Collinson noted that policymakers can help ensure that workers don’t get left behind amid the volatility of today’s workforce.

“Policymakers can also make it even easier and more affordable for employers to offer retirement benefits to their employees,” Collinson said.

Collinson added that policymakers should prioritize solving the funding issues of Social Security and Medicare because “workers are paying into these programs with expectation of receiving the benefits they have been promised.”

According to the survey, just 22% of workers feel they have “a lot” of working knowledge about personal finance. Although 58% of workers said they prefer to rely on outside experts to monitor and manage their retirement savings, only 35% reported currently using a professional financial adviser.

Gen Z and Millennials

Gen Z workers are starting their careers at a rocky time and have seen higher rates of unemployment in recent years than older workers. They are also facing prolonged labor market volatility, while they are often caretakers of older family members.

According to the report, almost six out of 10 Gen Z workers said they regularly feel exhausted and burned out—39% have more than one job and 59% have a side hustle.

These young workers are also worried about future employability, with more than half of survey respondents revealing their anxiety about artificial intelligence and robotics and whether these new tools will render their job skills obsolete.

The financial priorities of Gen Z respondents included paying off debt (55%), saving for a major life event (46%), making enough to cover basic living expenses (41%) and building emergency savings (40%).

According to the report, despite these competing priorities, 76% of Gen Z workers are saving for retirement through 401(k) or similar plans or outside the workplace. For those using a 401(k) or similar plan, they reported contributing 15% of their annual pay.

Collinson described Millennials as “feeling the crunch in their ‘sandwich years’ of juggling employment, raising children and caring for their aging parents” and said these responsibilities could lead to them procrastinating with their long-term retirement plans.

Almost six in 10 Millennial workers claimed they are still financially recovering from the pandemic and its aftermath, and 59% indicated that debt is hindering their ability to save for retirement, according to the report.

Regarding current financial priorities, 62% of Millennial respondents, when allowed to select multiple responses, ranked paying off debt as a top priority, 55% identified saving for retirement as a priority, and 46% said they are building their emergency savings funds.

Due to retirement still being two to three decades away, Collinson said Millennials still have time to save and grow their savings; she advised them to start creating financial plans “that reflect their goals and aspirations as well as their priorities and realities.”

Gen X and Baby Boomers

Generation X, whose members begin turning 60 this year, is behind on savings, and many of its members plan to work beyond the traditional retirement age to earn income and bridge saving gaps, according to Collinson.

The survey found that only 18% of Gen Xers are confident they will be fully able to retire comfortably, and just 23% “strongly agree” that they are building a large enough retirement nest egg.

For Baby Boomers, now in their early 60s to late 70s, almost 57% said they will retire at 70 or older or do not plan to retire at all, according to the survey. Baby Boomers also named declining health that requires long-term care and the extinction of or reduction of Social Security as their top retirement fear.

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