Four generations of US workers save for a retirement despite challenges

Four generations of US workers save for retirement, despite challenges

4 minute read

Generation Z, Millennials, Generation X, and Baby Boomers share at least one common goal in the US. A new study involving the four groups finds a large majority of employed workers are saving for retirement, although almost half expect to work past age 65 or do not plan to retire.

These are some of the findings of Living in the COVID-19 Pandemic: The Health, Finances, and Retirement Prospects of Four Generations, a report published by nonprofit Transamerica Center for Retirement Studies® (TCRS) in collaboration with Transamerica Institute®.

Part of TCRS' 21st Annual Retirement Survey of Workers, the report examines the retirement outlook of Generation Z, Millennials, Generation X, and Baby Boomers. The findings are based on a survey of employed workers conducted in late 2020 and contains recommendations for workers, employers, and policymakers to improve retirement security.

“Workers are weathering a public health crisis and contending with fears about the virus and vaccinations, concerns for family and friends, employment-related worries, and financial setbacks.”

Catherine Collinson, CEO and president of nonprofits Transamerica Institute and TCRS
Catherine Collinson, CEO and president of the Transamerica Institute and TCRS

The survey findings illustrate the experiences of workers across generations that can impact their health, financial well-being, and ability to save and invest for retirement:

The adjustments include reducing day-to-day expenses (32 percent), dipping into savings accounts (24 percent) and accumulating new credit card debt (17 percent).

Millennials, Generation Z, and Generation X (71 percent, 69 percent, 59 percent, respectively) are more likely than Baby Boomers (40 percent) to have made any adjustments. 

The negative impacts include reduced hours (27 percent), reduced salaries (14 percent), furloughs (10 percent), layoffs (8percent), and early retirement ( percent).

Generation Z (59 percent) is more likely to have been negatively impacted than Millennials, Generation X, and Baby Boomers (51 percent, 39 percent, and 30 percent, respectively).

Generation Z (35 percent) was more likely to cite paying off student loans as a financial priority, while Millennials, Generation X, and Baby Boomers are somewhat more likely to cite credit card debt (43 percent, 42 percent, and 37 percent, respectively).

Workers have only USD 5,000 (median) in emergency savings to specifically cover the cost of unexpected major financial setbacks. Emergency savings increase with age: Generation Z workers have saved USD 2,000, Millennials have saved USD 5,000, Generation X have saved USD 6,000, and Baby Boomers have saved USD 10,000 (medians).

Twenty-four percent of workers are currently serving as caregivers for a relative or loved one. Millennials (30 percent) and Generation X (26 percent) are more likely than Generation Z and Baby Boomers (18 percent and 12 percent, respectively) to be caregiving.

Sixty-six percent of workers are concerned about their physical health, and almost as many are concerned about their mental health (60 percent). Generation Z and Millennials (72 percent and 70 percent, respectively) are more likely to be concerned about their mental health, compared with Generation X and Baby Boomers (59 percent and 42 percent, respectively).

Concerns about comfortable retirement

“Given the magnitude of challenges workers have faced during the pandemic, it is truly remarkable that they have maintained focus on their future retirement. However, before the pandemic and today, many workers continue to be at risk of not achieving a financially secure retirement.”

Catherine Collinson

Collinson says that given the magnitude of challenges, it is remarkable that US workers have maintained focus on their future retirement. The survey finds that 82 percent of workers are saving for retirement through employer-sponsored plans and/or outside the workplace.

While the majority of workers are actively working to build up retirement savings, only 24 percent overall are "very” confident that they will be able to fully retire with a comfortable lifestyle. Millennials (30 percent) are more likely to be "very" confident than Baby Boomers (21 percent), Generation X (19 percent) and Generation Z (16 percent). Sixteen percent of workers across generations indicate their retirement confidence has declined as a result of the pandemic. 

Steps to improve retirement security

Workers can improve their fiscal health by creating a financial plan and gaining a full understanding of their situation. Preparing a budget, prioritizing expenses, setting short- and long-term goals, learning about investing, and developing a retirement strategy are important steps.

Employers can enhance their retirement, and health and welfare benefits offerings, as well as business practices, which can help employees protect their finances, save for the future, and manage work-life balance, while helping employers attract and retain talent in today's highly competitive market.

Building on recent legislation, policymakers can implement additional reforms that expand retirement plan coverage, increase incentives for employers to offer plans, and facilitate retirement savings.

"Workers' ability to achieve a secure retirement ultimately depends on access to meaningful employment throughout their lives, the availability of retirement, and health and welfare benefits, and the preservation of safety nets such as Social Security and Medicare," Collinson says. "As we emerge from the pandemic, we have an unprecedented opportunity to strengthen the fabric of our retirement system — including how we live, work, retire, and age with dignity."

Go to the report

Living in the COVID-19 Pandemic: The Health, Finances, and Retirement Prospects of Four Generations


The four generations

  • Generation Z (born 1997 to 2012)
  • Millennials (born 1981 to 1996)
  • Generation X (born 1965 to 1980)
  • Baby Boomers (born 1946 to 1964)