The pandemic has shaken the retirement confidence of the three main generations now in the workplace, says a study that notes that the effect generally increases with age, reflecting that older workers have less time to save toward their retirement.
The TransAmerica Center for Retirement Research found that effect among Millennials (born 1979 to 2000), Generation X (1964 to 1978) and Baby Boomers (1946 to 1963); relatively few of the generations before the Boomers or after the Millennials currently are in the workplace.
In a survey, it found that 20 percent of Millennials say their confidence in their ability to retire comfortably has declined due to the pandemic. That generation entered the workforce around the time of the Great Recession a decade ago and “as retirement investors, they began saving in a depressed market and enjoyed one of the longest-running bull markets in history. The coronavirus pandemic and 2020 recession marks the first major market downturn they have experienced.”
While workers in that generation have the longest time to save, they also expect to have to self-fund their retirement to a greater extent than those in the other two, and they also are more likely to have student debt, and more of it, than the other two, the report said.
Twenty-five percent of those polled in Generation X said their retirement confidence has decreased, it said. About four-fifths of them are saving for retirement, “but many are behind on their savings,” more than half have credit card debt and as a whole “they are in their sandwich years, during which they may be juggling their careers with raising children and caring for aging parents.”
Among Boomers, 32 percent said their retirement confidence has decreased. While they have had more years to save toward retirement, “many were hit hard during the Great Recession and now the pandemic. Unlike younger generations, they have less time to financially recover before they retire.”
It added: “Baby Boomer workers are planning to work to older ages than previous generations, yet few have a backup plan if forced into retirement unexpectedly. Amid the pandemic, they face greater health and employment-related risks than younger generations.”
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