Three generations of today’s workers harbor some fear they will not be able to afford the long retirement lives they anticipate having, according to Transamerica Center for Retirement Studies.
Whether retirement is just around the corner or decades away, each generation harbors some fear of financial insecurity, said the 18th annual Transamerica Retirement Survey of Workers.
This year’s wide-ranging study, which polled 6,372 workers, including baby boomers, Generation Xers and millennials, asks “Wishful Thinking or Within Reach? Three Generations Prepare for ‘Retirement.'” Baby boomers are defined as those born between 1946 and 1964, Gen Xers between 1965 and 1978, and millennials between 1979 and 2000.
Workers’ confidence in their ability to retire made a comeback after the Great Recession, but the confidence level stalled three years ago and has made little progress since then, according to Transamerica. In 2017, 62 percent of workers are confident they will be able to fully retire with a comfortable lifestyle, including 18 percent who are very confident and 44 percent who are somewhat confident.
Millennials, with the longest time line to retirement, are the most confident with 76 percent saying they are at least somewhat confident. For baby boomers, that number is 62 percent and for Gen Xers, it is 55 percent.
Overall, 44 percent of workers said they have fully recovered or were not impacted by the recession. Once again, Gen Xers are the most pessimistic; 23 percent said they have not yet begun to recover from the recession or that they may never recover. Seventeen percent of millennials and 18 percent of baby boomers agree.
Baby boomers have been the trailblazers in the new retirement climate, in which defined contribution plans have replaced defined benefit plans. Two-thirds plan to or are already working past age 65 or do not plan to retire, most for financial and healthy aging-related reasons.
However, many may not be laying the necessary groundwork for success, said Transamerica. Only 42 percent are proactively keeping their skills up to date so they can continue working past 65 or in retirement. Only 28 percent have a backup plan for retirement income if they find themselves unable to work before their planned retirement date. Thirty-eight percent expect Social Security to be their primary source of income when they retire, while 39 percent expect their primary source of retirement income to be self-funded accounts.
Gen Xers are the first generation to have had access to 401(k) plans for most of their working careers. They have high participation rates in these plans, but many should be saving more, the study said. The median savings rate is only 8 percent, though they should know they have time to make up the savings. Transamerica calls them the "stoic" and "struggling" generation.
“Gen Xers are a tremendously underserved generation,” said Catherine Collinson, CEO and president of the Transamerica Center for Retirement Studies. “They are at a critical age where they should be focused on saving for retirement. If they are not, they still have time to catch up in savings.”