From Boomers to Gen Z: How Each Generation Processes Retirement

New research from the Transamerica Center for Retirement Studies (TCRS) analyzes the retirement outlooks for each age group, noting that most U.S. workers believe their own generation faces more hardships in achieving financial security compared to other cohorts.

The study, “An Uncertain Future: Retirement Prospects of 4 Generations,” finds that 80% of workers agree with the statement, “Compared with my parent’s generation, people in my generation will have a much harder time achieving financial security.”

Yet, the reality is that all age groups struggle in achieving financial security, as each experience life events differing from one another. For example, while Gen Z workers have experienced higher rates of unemployment in recent years compared to older generations, Gen X workers have struggled with competing priorities that could take away from their retirement savings.

Further, 68% of workers across generations say they could work until retirement and still not save enough to meet their needs, showing the financial and economic impacts felt by all age cohorts.

The findings support Transamerica’s call for policymaker intervention. Even if workers were to fully maximize on all their opportunities to increase financial security, like engaging with a financial advisor and regularly monitoring their financial accounts, they still need support from policymakers, says Catherine Collinson, CEO and president of Transamerica Institute and TCRS.

This includes enacting change to shore up Social Security and Medicare funding and incorporating legislation to expand accessibility to workplace retirement plans.  

“The strength of the U.S. retirement system relies on a robust economy, labor force, and employment market – an environment that is conducive for workers to earn income and save for the future. With today’s accelerating pace of change, policymakers can help ensure that workers don’t get left behind,” said Collinson. “Policymakers can also make it even easier and more affordable for employers to offer retirement benefits to their employees. At the same time, Social Security and Medicare have funding issues that are begging to be solved. Workers are paying into these programs with expectations of receiving the benefits they have been promised.”

Below are some of the top findings for each generation from Transamerica’s survey.

Gen Z

• Almost six in 10 Generation Z workers (59%) often feel exhausted and burnt out. Thirty-two percent have more than one job and 59% have a side hustle.
• Forty-one percent of Generation Z workers are either currently serving or have served as caregivers for a relative or friend during their working careers – often for a grandparent or parent. Among these caregivers, nine in 10 (90%) have made one or more adjustments to their work situation as a result of becoming a caregiver, ranging from missing days of work and reducing hours to forgoing a promotion or quitting a job altogether.
• Future employability is top of mind for many Generation Z workers. More than half (52%) are worried that AI and robotics will make their job skills no longer needed.
• Generation Z workers’ current financial priorities include paying off debt (55%), saving for a major life event (46%), just getting by to cover basic living expenses (41%), building emergency savings (40%), and saving for retirement (32%). A noteworthy 23% cite supporting their parents as a financial priority.
• Despite these competing priorities, three in four Generation Z workers (76%) are saving for retirement through 401(k) or similar plans and/or outside the workplace – and they started saving at age 20 (median). Those participating in a 401(k) or similar plan currently contribute 15% (median) of their annual pay.
• Generation Z workers have saved $31,000 (estimated median) in total household retirement accounts and only $2,000 (median) in emergency savings. One in four (26%) have dipped into their retirement savings by taking a hardship withdrawal or early withdrawal from a 401(k) or similar plan or IRA.

Millennials

• Almost six in 10 Millennial workers (58%) are still financially recovering from the pandemic and its aftermath. Forty-nine percent indicate they are having trouble making ends meet, and 59% indicate debt is interfering with their ability to save for retirement.
• Forty-one percent of Millennial workers are currently serving and/or have served as caregivers for a relative or friend during their careers – most typically a parent. Among caregiving Millennials, almost nine in 10 (89%) made one or more adjustments to their employment.
• Millennial workers’ current financial priorities include paying off debt (62%), saving for retirement (55%), building emergency savings (46%), supporting children (43%), and saving for a major life event (40%). Seventeen percent cite supporting parents as a financial priority.
• Eighty-five percent of Millennial workers are saving for retirement in a 401(k) or similar plan and/or outside the workplace. They began saving at age 26 (median). Those participating in a 401(k) or similar plan currently contribute 10 percent (median) of their annual pay.
• Millennial workers have saved $65,000 (estimated median) in total household retirement accounts and only $5,000 (median) in emergency savings. Almost one in four (24%) have taken a hardship withdrawal or early withdrawal from a 401(k) or similar plan or IRA.

Gen X

• Only 18% of Generation X workers are very confident they will be able to fully retire with a comfortable lifestyle, and just 23% “strongly agree” that they are building a large enough retirement nest egg.
• Thirty-nine percent expect to retire at age 70 or older or do not plan to retire, and 56% plan to continue working in retirement.
• Eighty-two percent of Generation X workers are saving for retirement in a 401(k) or similar plan and/or outside the workplace. They began saving at age 30 (median). Those participating in a 401(k) or similar plan currently contribute 10 percent (median) of their annual pay.
• Half of Generation X workers (50%) expect their primary source of retirement income to come from self-funded savings, including 401(k)s, 403(b)s, and IRAs (39%) or other savings and investments (11%). Twenty-eight percent expect to primarily rely on Social Security. Seventy-seven percent are concerned that Social Security will not be there for them when they are ready to retire.
• Generation X workers have saved $107,000 (estimated median) in total household retirement accounts and $6,500 in emergency savings. Seventeen percent have dipped into their retirement savings by taking a hardship withdrawal or early withdrawal.
• Only 25% of Generation X workers have a written financial strategy for retirement.

Baby Boomers

• Almost six in 10 Baby Boomer workers (57%) expect to retire at age 70 or older or do not plan to retire. Their greatest retirement fears are declining health that requires long-term care (49%), outliving their savings and investments (44%), and that Social Security will be reduced or cease to exist in the future (44%).
• Almost four in 10 Baby Boomer workers (39%) expect Social Security to be their primary source of retirement income, while 30% expect to rely on income from 401(k)s, 403(b)s, and IRAs, and 11% from other savings and investments. Seven percent expect their primary source of retirement income to come from continued work and 7% expect it to come from a company-funded pension plan.
• Eighty-five percent of Baby Boomer workers are saving for retirement in a 401(k) or similar plan and/or outside the workplace. They began saving at age 35 (median). Those participating in a 401(k) or similar plan currently contribute 10% (median) of their annual pay.
• Baby Boomer workers have saved $270,000 (estimated median) in total household retirement accounts and $20,000 (median) in emergency savings. Twelve percent have taken a hardship withdrawal or early withdrawal from a 401(k) or similar plan or IRA.
• Just 27% of Baby Boomer workers have a written financial strategy for retirement, and only 38% have a backup plan for income if forced into retirement sooner than expected.

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