A new report from Wells Fargo Investment Institute explores how each generation in the workforce today — baby boomers, Generation Xers and millennials — is approaching retirement and how today’s trends are redefining retirement in the 21st century.

Perhaps the most recognizable difference is how each expects to fund its retirement.

Millennials and Gen Xers expect 401(k)s and IRAs to be the primary source of funds for their monthly expenses in retirement, compared with baby boomers who say Social Security will be — or is already — their main source of funds, according to the report.

“Millennials more than any other generations are going to have to rely on themselves to save for their retirement. With the other generations, some of them still have access to pensions, they may have more access to Social Security than what would be left for the millennial generation,” Veronica Willis, investment strategy analyst for Wells Fargo Investment Institute, told ThinkAdvisor.

The report, “Reimagining Retirement: Generational Strategies for 21st Century Challenges,” defines baby boomers as those born between 1946 and 1964, Gen Xers as those born between 1965 and 1980, and millennials as those born between 1981 and 1997.

Baby Boomers

How are baby boomers approaching retirement differently than past generations?

“We’re seeing that a lot of [boomers] are staying in the workforce longer than older generations have,” Willis said. “Or, even after retirement, they’re returning for part-time work or maybe doing consulting work.”

For some boomers, a job may supplement Social Security income. For others, working part time offers the opportunity to stay active and intellectually engaged, and postpone dipping into their retirement assets, according to the report.

“You want to stay intellectually focused on your career, or maybe there’s a passion project that you want to work on,” Willis said. “Maybe you’re wanting to start your own business. We’re seeing entrepreneurship increasing for that cohort a lot.”

According to the report, the percentage of seniors (65 and older) in the U.S. workforce should continue to rise. In 1996, there were 12.1% of seniors in the workforce. That grew to 19.3% in 2016 and is expected to grow to almost 22% by 2026.

Generation X

How prepared do Gen Xers feel they are for retirement?

This generation is sandwiched between two larger cohorts, the older baby boomers and younger millennials, and as a result must balance multiple priorities.

“They’re paying for care for aging parents and they’re saving for their children’s education so there’s not as much left over for them to save for retirement,” Willis explained. “They’re being pulled in a lot of different directions.”

As a result, members of this generation may have shortchanged their own retirement savings plan, according to the report. This may also be why Gen Xers are less confident about retirement.

According to the report, 59% of Generation X expressed confidence in having enough money to maintain lifestyle throughout retirement, compared with 72% of all workers.

It’s important for Gen Xers to remember that there are other options for paying for their children’s education, according to Willis. “There are not other options to save for your own retirement,” she added.

Willis also noted that Gen Xers — who are in or are approaching their 50s — are generally in their peak earning years.

“There are those catch-up provisions that they can take advantage of” in retirement plans, she explained.

Millennials

What sets millennials apart in how they invest for retirement?

“One difference we’ve really seen with millennials is how conservative they are in retiring,” Willis told ThinkAdvisor.

According to the report, millennials were left wary of riskier investments after experiencing the deepest recession since the Great Depression early in their lives. A 2017 Wells Fargo Asset Management survey revealed that 20% of millennials say they will never invest in the stock market.

The good news is that millennials are starting to save early.

“I think that’s been hammered on [millennials], ‘Start saving as soon as you can,’” Willis said. “And that’s a message that millennials have heard. They’ve started saving earlier than other generations started saving — but they’re saving too conservatively.”

According to the report, millennials began saving for retirement at age 24, on average a full decade earlier than baby boomers.

But “starting to save early and saving what you can is just one piece,” Willis said “The second piece is how are you allocated in your savings. And for a millennial, who has a much longer time to go before they actually retire, they’ll have to be more aggressive to allow their assets to grow.”

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