From Gen Zers to Gen Xers, different age cohorts are expressing their contrasting outlooks for retirement.
New research from Principal Financial Group finds generations think about their retirement differently, yet there continues to be a need for employee engagement and personalized investment strategies to help defined contribution (DC) plan participants improve financial security and retirement readiness.
According to the Principal Financial Well-Being Index, those in the “Sandwich Generations” are likelier to prefer a phased retirement, as 67% of Generation Xers and 56% of Millennials would rather opt for gradually reduced hours as they head into retirement.
Employers are also keen on phased retirements, as 77% in the Principal survey believe that older employees offer wisdom and mentorship that is vital to their business’ success, yet only 11% offer phased retirement opportunities.
On the other hand, Gen Zers and Baby Boomers would rather move immediately from full-time work to retirement. In fact, most participants in the Principal survey prefer to stop working entirely, with only 28% of the total survey population expressing interest in phased retirements.
While some differed on how they would retire, others varied on when they would start out their golden days. Gen Zers expect to retire the earliest at age 55, compared to 68 for Baby Boomers, 64 for Gen Xers, and 59 for Millennials.
“Attitudes and expectations for retirement continue to evolve, and we expect the desire to approach retirement in phases will continue to grow with future generations,” said Chris Littlefield, president of Retirement and Income Solutions at Principal, in a statement.
The survey comes at a time when more participants are prioritizing their long-term savings along with having enough money for day-to-day necessities. One finding from the Principal report showed that participants ranked saving for retirement as their top priority, followed by affording basic needs and paying off consumer debt.
Going forward, Littlefield expects to see a higher number of employers offering personalized savings and investment strategies that “take into account an individual’s financial goals, lifestyle, health care needs, dependent care obligations, retirement income expectations,” and other factors that result in financial security throughout retirement.
SEE ALSO:
- This Gen Z Trait Will Disrupt Retirement Industry Most by 2030
- Millennials to Emphasize Retirement Savings Come 2024
- Gen Xers Know They’ll Need a Lot to Retire—But They Don’t Have It