A new report from the Brookings Institution examines the prospects for retirement saving by millennials in 2050, when members of that generation will range in age from 54 to 69.
The report finds that millennials will head into retirement with several advantages over earlier generations, but also some disadvantages.
Start with the advantages. Millennials are the most educated generation in history, according to Brookings. In addition, owing to the pension system’s evolution toward defined contribution plans, they may remain in the workforce longer than any previous generation, giving them additional years to save.
On the other side of the ledger, millennials started work in the wake of the financial crisis and recession and during the slow but steady recovery. Many more than in previous generations are employed in contingent workforce jobs that have less robust retirement benefits than traditional jobs.
As well, they have lower net worth and higher student debt burdens than their parents and grandparents at the same age. They are marrying, buying homes and starting families later. They will likely live longer, and at the same time, have to manage and navigate their own retirement plans to a greater extent than previous generations.
Millennials can also look forward to increased burdens from any resolution of the government’s long-term fiscal shortfalls in general, and the financial imbalances in Social Security and Medicare in particular. They face an economic future with projections of lower rates of return and economic growth than in the past.
This means millennials will have a harder time that previous generations accumulating sufficient funds for retirement.