Young Workers Want to Save, Lack Capital

A new global report suggests young workers lack the resources to start saving effectively for retirement, despite enthusiasm over employer-sponsored retirement plans.

Chief among young workers’ roadblocks to a secure retirement are high levels of student debt and scarce job prospects, according to “The Changing Face of Retirement: The Young, Pragmatic, and Penniless Generation,” a report released by the Transamerica Center for Retirement Studies (TCRS) in conjunction with Aegon.

In fact, those worries have led a majority (59%) of workers in their 20s from a dozen developed countries in North America, Europe and Asia to expect to be worse off financially than their parents when reaching retirement.

“For many around the world, their 20s bring an exciting time with seemingly endless possibilities,” Catherine Collinson, president of TCRS, said. “But, saddled with student debt and scarce job prospects, our research shows that today’s 20-somethings are finding it difficult to embark on their careers and gain their financial footing.”

One encouraging result in the study shows young workers already recognize the potential value of employer benefit programs, with 87% saying a workplace retirement plan with employer-match contributions will be an important factor when choosing their next job. That percentage measured highest among young Chinese workers (93%) and lowest among Japanese workers (74%). Eighty-four percent of young Americans reported valuing such benefits.

Also encouraging is the one in four 20-somethings labeling themselves “habitual savers” who “always make sure” they are saving for retirement. Of the countries surveyed, young American workers are the most likely to be self-described habitual savers, clocking in at 35%. Spanish workers, at 14%, are the least likely.

The report indicates nearly three in 10 (28%) young workers believe they will be called upon to support aging parents before and during their own retirement. One-third of American workers in their 20s expect to provide such support, along with 47% of Chinese workers, 39% of Polish workers and 31% of young workers in both Germany and Hungary.

Twenty-somethings were also asked what would encourage them to save more for retirement. The majority (57%) said a pay raise would encourage more retirement savings. On this figure the response rate was highest in Hungary (72%) and lowest in Japan (32%), with about two-thirds (67%) of Americans saying they would be encouraged to save more if they received a raise.

A more generous employer-match contribution in workplace retirement plans would also encourage better savings. Thirty-nine percent of American workers in their 20s said a more generous match would encourage them to save more. Among other countries, Canadian workers were most likely, at 44%, to be motivated by a better match. Swedish workers, at 25%, were least likely.

Another way to improve saving behaviors is to simplify investment products. In fact, almost one-forth (24%) of workers in their 20s said they would be encouraged to save more if investment products were easier to understand—including 36% in China and 32% in the U.S.

Lastly, governments can help lead the way to better retirement outcomes through the creation of stable, long-term financial and taxation policy. Among 20-somethings, 34% stated that more generous tax breaks on long-term savings and retirement plans would encourage them to save.

Researchers featured the following countries in the report, which cumulatively have access to around 85% of the world’s private retirement assets excluding government benefits: Canada, China, France, Germany, Hungary, Japan, the Netherlands, Poland, Spain, Sweden, the United Kingdom and the United States.

The full report is available at