People of the three main generations currently in the workforce share similar concerns about their finances in retirement but are falling short in taking actions now in response, according to a report from the TransAmerica Center for Retirement Studies.
The report, based on polling samples of the baby boom, generation X and millennial generations, found that majorities of all three expect to have a harder time achieving financial security for retirement than their parents’ generation, with the younger two generations agreeing more strongly; and believe they could not save enough for a secure retirement by working until age 65, with the two older generations more strongly holding that view. In addition, about a third overall expect their standard of living to decrease when they retire, with the older two generations believing that more strongly.
That comes at a time when all three generations expect to have longer lives and thus longer periods in retirement than those currently retired, the study noted.
It said that as one strategy to make up for their expected shortfalls, more than half expect to continue working even after retiring. “However, when asked what steps they are taking to help ensure they can continue working, 27 percent of workers say they have not taken any steps.
“Among those who are taking proactive steps, workers most frequently cite that they are staying healthy (48 percent), performing well at their current job (43 percent) and keeping their skills up to date (40 percent). Baby boomers are more likely to cite staying healthy (56 percent) and somewhat more likely to cite performing well at their current job (48 percent) than younger workers. In contrast, millennials are more likely to be networking and meeting new people (23 percent) and going back to school (19 percent) than older workers,” it said.
Further, only about a quarter in each generation have a backup plan in case retirement comes sooner than expected, for example due to health reasons.
The report also found that many are not doing what they need to do now to prepare for retirement. Sixteen percent of baby boomers, 27 percent of generation X and 37 percent of millennials have retirement savings of under $50,000—including 9, 10 and 13 percent, respectively, who have no retirement savings. Of those who do have retirement savings accounts, about a third of the two younger generations and about a fifth have borrowed against those savings, a phenomenon known as leakage, which erodes the future value of those savings.