Amid the climate change crisis, the wake of the pandemic, and rampant inflation, the average American isn’t feeling great about what retirement will look like for future generations.
That’s the finding of the 23rd Annual Retirement Survey of Workers from Transamerica Center for Retirement Studies, dedicated to educating the public about retirement issues. The organization surveyed 5,725 American workers, ages 18 and over, and found that 41% of workers think future retirees will be worse off than current retirees.
Below, the key findings from each generation:
Gen Z (born 1997-2012)
Gen Z is already saving for retirement: The median age at which Gen Zers start saving for retirement is 19. A majority (66%) of the generation have already started saving through employer-sponsored 401(k)s or similar retirement plans, contributing a medial 20% of their annual pay, and have $29,000 (estimated median) in their retirement accounts, but only $1,000 (median) in emergency savings.
But they’re still struggling financially: 57% have trouble making ends meet, 30% are working two or more jobs, 57% have a side hustle, and 28% have taken a hardship withdrawal from their retirement plans.
They also worry about their mental health: While 72% are in good or excellent physical health, 71% are concerned about their mental health.
Millennials (born 1981-1996)
Millennials started saving later: Because of a “turbulent economy” during their early working years, millennials started out with greater student debt than their parents, which could explain why millennials didn’t start saving for retirement until age 25 (median). While 78% are saving through 401(k)s or similar retirement plans, they’re setting aside only 12% of their annual salary, and have $49,000 (estimated median) in their retirement accounts with $3,500 (median) in emergency savings.
But they’re also struggling financially: 30% became unemployed during the pandemic, 45% have a side hustle, 21% have two or more jobs, and almost half (48%) say they have trouble making ends meet, with 24% having taken a hardship withdrawal from their retirement plans.
They’re also caregivers: Now entering the sandwich years of juggling careers, kids, and aging parents, 40% are currently serving or have served as caregivers for a relative or friend while working. Perhaps unsurprisingly, 69% worry about their mental health.
Gen X (born 1965-1980)
Gen X started saving even later: The median age at which Gen Xers started investing in retirement plans is 30, in part because 401(k)s were just becoming available in the 1980s and ’90s. Now, 81% are participating in 401(k)s or similar retirement plans. On average, they’re setting aside 10% of their annual salary for retirement, and have $82,000 (estimated median) invested in employer-sponsored retirement accounts, with only $5,000 (median) invested in emergency savings. Only 19% have taken hardship withdrawal from their retirement plans.
But they’re not feeling great about retirement: Only 17% are “very confident” they’ll be able to retire comfortably, though nearly one in four (24%) strongly agree they’re building a strong enough nest egg. A full 80% are worried that Social Security will not be there for them when they’re ready to retire.
They expect to extend their working years: To gain more time to save for retirement, 54% of Gen Xers plan to work in retirement, and 40% expect to retire at age 70 or older, or do not plan to retire.
Baby boomers (born 1946-1964)
Baby boomers started saving for retirement at an older age: Owing to the fact that baby boomers were mid-career when traditional pension plans and the retirement landscape were changing, they didn’t start planning for retirement until age 35 (median). Now, 85% have 401(k)s or similar employer-sponsored plans, are contributing an average of 10% of their annual pay, and have saved an estimated average of $289,000. But their emergency savings is only $25,000 (median). Yet, only 12% have had to take a hardship withdrawal from their retirement account, and 41% expect to rely on Social Security as their primary source of retirement income.
But they’re feeling pretty good: 85% have a strong sense of purpose in life, and a whopping 90% of boomers are generally happy.
And they’re not looking to retire early: Almost half (49%) expect to work past age 70 or are not planning to retire. Their reasons? While 83% say it’s financially related, 77% say it’s healthy aging-related—with 66% saying their employers are “age-friendly.”
“As we look toward the future, one in which all Americans can retire with dignity, policymakers must take center stage in orchestrating ways to strengthen the retirement system for current and future generations,” CEO and president of Transamerica Institute Catherine Collinson wrote in the report. “Employers must continue to play a vital societal role by providing jobs, income, and benefits that can help workers protect their health and finances, and by facilitating saving and investing for retirement.”
