Millennials and generation X are more worried about retirement than older generations in the wake of the coronavirus pandemic, according to a new survey of U.S. workers by the National Institute on Retirement Security.
Some 64 per cent of millennials (ages 25 to 43) and 54 per cent of gen-Xers (ages 44 to 55) are concerned, compared to 42 per cent of baby boomers (ages 56 to 74) and 25 per cent of the silent generation (aged 75 and older).
“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 Dan Doonan, NRIS executive director and the report’s co-author, in a press release.
“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. Going forward, it will be critical for policy-makers to find ways to re-stabilize the retirement infrastructure so these generations can be self-sufficient in their older years.”
The survey found pensions are viewed favourably by all generations, with millennials expressing the highest level of favourability, at 81 per cent, followed by 76 per cent of baby boomers, 71 per cent of gen X and 68 per cent of the silent generation.
It also found a broad agreement that all U.S. employees should have access to a pension to ensure financial independence in retirement. This was cited by 83 per cent of the silent generation, 76 per cent of both baby boomers and gen X and 71 per cent of millennials.
Across all generations, most of those who said they’re concerned about the impacts of the pandemic plan to delay their retirement, cited by 69 per cent of the silent generation, 68 per cent of millennials, 66 per cent of gen X and 65 per cent of baby boomers.
In addition, millennials were most likely to take actions during the pandemic that could harm their long-term financial security. About a third (36 per cent) of millennials said they’ve spent their emergency savings during the crisis, compared to 24 per cent of gen-Xers, 11 per cent of baby boomers and six per cent of the silent generation.
Less than a fifth (17 per cent) of millennials said they withdrew some of their retirement savings, compared to 12 per cent of gen-Xers, eight per cent of baby boomers and four per cent of the silent generation. And 16 per cent of millennials decreased their retirement savings, compared to 10 per cent of gen X, five per cent of baby boomers and none of the silent generation.
There was also generational agreement that the U.S. faces a retirement crisis, with millennials (72 per cent) and gen-Xers (59 per cent) most pessimistic about retirement. This compares to 43 per cent of baby boomers and 26 per cent of the silent generation.
And all generations surveyed seemed to understand there’s a wide mix of factors that make preparing for retirement more difficult, including longer life spans, the rising costs of health care in retirement and fewer pension plans.
“The U.S. is facing a retirement savings crisis that likely is worsening thanks to yet another economic crisis,” noted the report. “Except for wealthier Americans, the typical working American is not on track to maintain their standard of living in retirement. The retirement savings shortfall can be attributed to many factors, including the move away from pensions, stagnant wages and a lack of employer sponsored plans. Also, cuts to Social Security benefits and skyrocketing costs for health, long-term care and housing in retirement are exacerbating the retirement crisis.”