Jul 29, 2021
A national survey by the National Institute on Retirement Security (NIRS) finds that 64% of Millennials and 54% of Generation X are more concerned about retirement and the negative impact the COVID-19 pandemic will have on their retirement plan than older generations.
According to the report, the typical American is not on track to maintain their standard of living in retirement. Among these Americans, Generation X and Millennials are the most pessimistic about retirement.
Seventy-eight percent of Millennials report being substantially more inclined to believe they will have to work past normal retirement age and there is agreement across generations that workers cannot save enough on their own to have a secure retirement. More specifically, 66% of working Millennials have nothing saved for retirement.
The past several decades have seen dramatic changes to the U.S. retirement system. In wake of this national retirement crisis, the American workforce lacks employer-sponsored retirement plans and fewer workers have stable and secure defined benefit pensions.
Depressed wages, high college debt, and lack of participation in employer retirement plans are among the challenges faced specifically by Millennials today, contributing to their heightened worry. Further complicating retirement is growing financial asset inequality among Americans, which is consistent across generations. This wealth inequality, combined with dangerously low retirement savings and a lack of employer-sponsored resources and retirement plans, poses a significant threat to working Americans.
"Millennials and Gen X have lived through multiple economic downturns and decades of stagnant wages. Couple that with longer life spans and rising health and long-term care costs, and it's easy to understand their pessimism,” said Dan Doonan, NIRS executive director and report co-author.
Three-fourths of all generations agree that Washington leaders need to give retirement a higher priority and all generations report broad support for Social Security, including support for increasing contributions and expanding benefits.
Millennials express the highest favorable views of pensions and there is wide agreement generationally that pensions are better than 401 (k) plans for providing retirement security.
"Generation X and Millennials are the first two generations that largely will enter retirement without a pension, so it's not surprising that their anxiety is higher," said Doonan. “Going forward, it will be critical for policymakers to find ways to strengthen our retirement infrastructure so these generations can be self-sufficient in their older years.”
A survey published in 2020 by MissionSquare Research Institute (formerly the Center for State and Local Government Excellence) found that 88% of public sector employees worry about their finances and 68% would be likely to participate in a program if offered.
The need for financial wellness resources is evident among American workers in the public sector. Among these needs, retirement planning proves to be prevalent, ranking of greatest interest to survey respondents.
While policymakers consider changes to Social Security, the data suggests a need for employers to provide financial and retirement education and tools to relieve the concern of Millennial and Generation X workers.
Employee financial wellness programs may also serve as a useful recruitment and retention strategy for public agencies seeking to engage Millennial and Generation X workers.