What You Need to Know
- Millennial, Generation Z and Gen X respondents were likelier to have made financial adjustments than baby boomers.
- Only 30% of millennials surveyed said they are very confident that they will be able to retire comfortably.
- Other generations are even less confident: 21% of boomers, 19% of Gen Xers and 16% of Gen Z.
Sixty percent of employed Americans report that they had to make financial adjustments because of pandemic-related economic pressures, yet 82% also say they are saving for retirement, according to a newly released study by the nonprofit Transamerica Center for Retirement Studies in collaboration with the Transamerica Institute.
“Workers are weathering a public health crisis and contending with fears about the virus and vaccinations, concerns for family and friends, employment impacts and financial setbacks,” Catherine Collinson, chief executive and president of the Transamerica Institute and TCRS, said in a statement.
“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.”
The Harris Poll conducted the online survey on behalf of TI and TCRS between Nov. 17 and Dec. 29, 2020 among a nationally representative sample of some 10,000 adults. The findings in the report come from a subsample of 3,109 workers in for-profit companies of one or more employees, made up of 301 Generation Z, 1,249 millennials, 960 Gen Xers, 573 baby boomers and 26 workers who were born before 1946.
Workers’ Pandemic-Related Experiences
The survey found that respondents who made financial adjustments because of the pandemic, millennials, Generation Z and Gen Xers were likelier to have done so than boomers.
Adjustments included reducing day-to-day expenses, tapping savings accounts, accumulating credit card debt, reducing or stopping contributions to retirement accounts, forgoing health care, borrowing money, relocating, and stopping rent or mortgage payments.
Forty-three percent of workers in the survey experienced negative effects to their employment, with Generation Z hit harder than older workers by reduced hours or salaries, furloughs and layoffs.
Sixty-two percent of respondents said they are paying off one or more types of debt as a financial priority. For Generation Z, that is likely to be student loans, while for their older counterparts, it is more likely to be credit card debt.
Survey participants reported a median of only $5,000 in emergency savings to specifically cover the cost of unexpected major financial setbacks, ranging from medians of $2,000 for Generation Z to $10,000 for boomers.
A quarter of respondents said they are providing care for a relative or a loved one; this burden falls more heavily on millennials and Gen Xers than on Generation Z and boomers.
Sixty-six percent of workers expressed concern about their physical health, and 60% about their mental health. Seven in 10 Generation Z and millennials were more likely to be concerned about their mental health, compared with 59% of Gen Xers and 42% of boomers.
Weak Retirement Confidence
More than 80% of boomers, Gen Xers and millennials surveyed said they are saving for retirement through employer-sponsored plans or outside the workplace, compared with 70% of Generation Z.
Among those saving for retirement, Generation Z started doing so at a median age of 19, millennials at 25, Gen Xers at 30 and boomers at 35.