All Generations Are Worried About Retirement

Whether referring to Baby Boomers, Generation X or Millennials, Americans of all ages are worried about having enough money to fund their retirement, according to research by the Transamerica Center for Retirement Studies.

Forty-five percent of Baby Boomers expect their standard of living will decrease in retirement, 83% of Generation X think their generation will have a harder time achieving financial security than their parents, and only 18% of Millennials are very confident about their future retirement.

Sixty-one percent of workers say they have not fully recovered from the Great Recession, 13% have not started to recover, and 7% think they may never recover. Seventy-seven percent of workers think that Social Security will  not exist when they retire, only 51% of workers think they are building an adequate nest egg, and 65% think they could work until age 65 but still not have enough saved to meet their needs in retirement.

“Today’s workers are grappling with retirement security and are challenged by the wobbly three-legged stool comprising Social Security, employer-sponsored retirement benefits and personal savings,” says Catherine Collinson, president of the Transamerica Center for Retirement Studies. “Amid retirement savings shortfalls, American workers are attempting to prop up our system’s three-legged stool by adding a fourth leg: working during retirement.” The survey found that 38% of workers expect to work during their retirement.

NEXT: Baby Boomers’ outlook

Sixty-six percent of Baby Boomers plan to or are already working past age 65—or don’t expect to ever retire. Eighty-seven percent of Boomers are expecting Social Security to fund some of their retirement needs, and 34% expect it will be their primary source of income. Seventy-eight percent believe retirement accounts or other savings and investments will fund their retirement, but only 34% say they have a traditional pension plan.

The average household savings of all of their retirement accounts is $147,000. Transamerica notes that the average balance may be low because 401(k) plans were introduced when Boomers were already mid-career.

“Baby Boomers are the generation that has rewritten societal rules at every stage of their life,” Collinson says. “Now, Baby Boomer workers are redefining retirement by planning to work until an older age than previous generations. Baby Boomers’ vision can only be achieved if they are proactive about staying employable and if employment opportunities are available to them. As part of their retirement planning, Baby Boomers should create a Plan B if retirement happens unexpectedly due to job loss, health issues or other intervening circumstances.”

Among Generation X, 77% are saving for retirement and started saving at the average age of 28, deferring an average of 7% of their salaries. Unfortunately, 30% have taken a loan or early withdrawal from retirement savings, with commonly cited reasons relating to paying off debt or unplanned major expenses. This may be related to the fact that they have only $5,000 in emergency savings, on average. Their average retirement balance is $69,000, and only 12% are very confident that they will retire with a comfortable lifestyle.

“Generation X entered the workforce in the late 1980s and is the first generation to have access to 401(k) plans for the majority of their working careers,” Collinson says. “As such, they are early adapters who had to learn from their own experience without precedents to help guide their way. Generation X has fallen behind on their retirement savings, but they still have time to catch up and improve their retirement outlook if they begin focusing on it right now.”

Among Millennials, 72% have started saving, on average at the young age of 22. Among those who are offered a 401(k) plan, 72% are contributing to it at an average rate of 7% of their salaries. Thirty percent are saving more than 10%, and their average retirement savings balance is $31,000.

However, 72% say they do not know as much as they should about retirement investing, and 22% say the majority of their savings are in bonds, money market funds, cash or stable value funds. Seventy-five would like more information from their employer about how to achieve their retirement goals, and 80% would like mobile applications for managing their accounts.

“Millennials are the youngest and largest generation in the workforce,” Collinson says. “They’ve heard the word that they need to save for retirement, [and they] are doing a great job saving for retirement.”

The report comes on the heels of a Jefferson National survey of Generation X and Millennials that found when hiring an adviser, they value holistic advice, a fiduciary standard and leading-edge technology.

Transamerica’s full, 94-page report, “Perspectives on Retirement: Baby Boomers, Generation X and Millennials,” can be downloaded here.