“Millions of U.S. workers are at risk of not achieving a financially secure retirement. The situation is intensifying with Social Security’s and Medicare’s projected funding shortfalls, population aging, skyrocketing costs of long-term care, and workers’ obstacles in saving and investing,” said Catherine Collinson, CEO and president of Transamerica Institute and TCRS.
The Multigenerational Workforce: Life, Work, and Retirement is part of TCRS’ 24th Annual Retirement Survey, one of the largest and longest-running surveys of its kind. The report examines the retirement outlook of U.S. workers aged 18 and older who are employed by for-profit companies. It provides comparisons of responses by Generation Z, Millennials, Generation X, and Baby Boomers.
Priorities for the President and Congress to Improve Retirement Security
Workers’ top priority for the President and Congress to help people have a financially secure retirement is addressing Social Security’s funding shortfalls (58%), according to the survey’s findings. Other priorities include addressing Medicare’s funding shortfalls (46%), making out-of-pocket health care expenses and prescription drugs more affordable (46%), ensuring all workers can save for retirement in the workplace (45%), increasing access to affordable housing (37%), implementing financial literacy curriculum in schools (37%), innovating more affordable solutions for long-term care (35%), supporting family caregivers (34%), creating incentives for continuing education (27%), and providing and/or subsidizing additional broadband access (27%).
How to Address Social Security’s Funding Shortfall
“American workers are stressed out about Social Security,” said Collinson. Almost three in four workers (73%) are concerned that Social Security will not be there for them when they are ready to retire. Forty-three percent of Baby Boomers and 29% of Generation X expect it to be their primary source of retirement income, according to the survey’s findings.
When asked how Congress should address Social Security’s funding shortfall, workers are lukewarm about possible actions such as increasing the maximum earnings subject to payroll taxes (40%), increasing the Social Security payroll tax rate (38%), preserving retirement benefit payments for retirees in greatest need (34%), and raising the retirement age (23%). Just 4% say that Congress should “do nothing.”
“Workers are counting on Social Security for retirement income. The clock is ticking with the Social Security trust funds’ estimated depletion in the next decade. The sooner Congress takes action, the more time workers will have to adjust their financial plans, if needed, before they retire. The longer Congress waits, the more disruptive the changes could be,” said Collinson.
Key Indicators of Retirement Readiness Across Generations
“Increasingly, today’s workers are expected to self-fund a greater portion of their retirement income compared with prior generations, but they are not fully equipped to take on the responsibility and associated risks. Many are on a collision course toward insufficient savings,” said Collinson. The survey finds just one in five workers (21%) say they know “a lot” about personal finance and only 32% use a professional financial advisor.
Some good news is most workers are saving for retirement through an employer-sponsored plan and/or outside the workplace. Younger generations are getting a head start. Among those who are saving, Generation Z started at age 20, Millennials started at age 25, Generation X at age 30, and Baby Boomers at age 35 (medians).
Seventy-six percent of workers are offered a 401(k) or similar plan by their employers. Generation Z (69%) and Baby Boomers (65%) are less likely than Millennials (80%) and Generation X (78%) to be offered a such plan, which can partly be explained by their being more likely to be employed part time.
Many workers lack adequate emergency savings and, in the event of a financial setback, some are tapping into their retirement savings by taking hardship withdrawals and/or early withdrawals including Generation Z (23%), Millennials (21%), Generation X (16%), and Baby Boomers (14%).
Baby Boomers, the generation closest to retirement, have saved just $194,000 in total household retirement accounts, while Generation X has saved $93,000, Millennials have saved $50,000, and Generation Z has saved $40,000 (estimated medians).
“Now is the time for the President and Congress to restore confidence and strengthen the U.S. retirement system by addressing Social Security, Medicare, access to workplace retirement plans, financial literacy, and other drivers of retirement security,” said Collinson. “At the same time, policymakers and the retirement services industry must focus on implementing the SECURE 2.0 Act of 2022 and its provisions that make it easier for employers to offer retirement benefits and help workers save, invest, and protect their savings.”
The Multigenerational Workforce: Life, Work, and Retirement explores the health and well-being, employment, personal finances, and retirement preparations of the multigenerational workforce including Generation Z (born 1997 to 2012), Millennials (born 1981 to 1996), Generation X (born 1965 to 1980), and Baby Boomers (born 1946 to 1964). Visit www.transamericainstitute.org. Listen to Transamerica Institute’s podcast ClearPath – Your Roadmap for LifeSM. Follow on LinkedIn, Facebook, and X (formerly Twitter) @TI_insights and @TCRStudies.
About Transamerica Center for Retirement Studies
Transamerica Center for Retirement Studies® (TCRS) is an operating division of Transamerica Institute®, a nonprofit, private foundation. Transamerica Institute is funded by contributions from Transamerica Life Insurance Company and its affiliates. TCRS and its representative cannot give ERISA, tax, investment, or legal advice. This material is provided for informational purposes only and should not be construed as ERISA, tax, investment, or legal advice. Interested parties must consult and rely solely upon their independent advisors regarding their situation and the concepts presented here. www.transamericainstitute.org/about
About the 24th Annual Transamerica Retirement Survey
The analysis contained in The Multigenerational Workforce: Life, Work, and Retirement was prepared internally by the research team at Transamerica Institute and TCRS. The 25-minute online survey was conducted within the U.S. by The Harris Poll on behalf of Transamerica Institute between September 14 and October 23, 2023, among a nationally representative sample of 10,002 adults and an oversample of 2,020 workers in a for-profit company employing one or more employees. The data in this press release is shown for a subsample of 5,730 workers in a for-profit company employing one or more employees. Data was weighted where necessary for age by gender, race and ethnicity, region, education, marital status, household size, household income and propensity to be online to being them in line with their actual proportions in the population. Respondents were selected from among those who have agreed to participate in our surveys. The sampling precision of Harris online polls is measured by using a Bayesian credible interval and the worker sample data is accurate to within +1.7 percentage points using a 95% confidence level. This credible interval will be wider among subsets of the surveyed population of interest. Percentages are rounded to the nearest whole percent.
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Transamerica Center for Retirement Studies®
Los Angeles, Calif.
Media Contact: Kyle Moschen
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SOURCE Transamerica Center for Retirement Studies
