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Retirement Planning > Saving for Retirement

Workers Are Saving, But Few Feel Very Confident About Retirement: Study

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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.

The survey found that loans and early withdrawals from retirement accounts are not uncommon.

Forty-four percent of millennials said they have dipped into retirement savings, compared with 33% of Gen Xers, 30% of Generation Z and 17% of boomers.

According to the survey findings, workers’ total household retirement savings may be inadequate at an estimated median of $93,000 among all respondents. Here are the median savings broken down by generation:

  • Boomers: $202,000.
  • Gen Xers: $107,000.
  • Millennials: $68,000.
  • Generation Z: $26,000.

Forty-nine percent of workers said they expect to work past age 65 or do not plan to retire, an expectation that is much higher among boomers than younger workers. One in five workers expect to retire later because of the pandemic, with more millennials than others having this expectation.

A mere 30% of millennials in the survey said they are “very” confident that they will be able to fully retire with a comfortable lifestyle. Other generations are even less confident: 21% of boomers, 19% of Gen Xers and 16% of Generation Z. 

Sixteen percent of workers across generations said their retirement confidence has declined as a result of the pandemic.

Improving Workers’ Retirement Security

“The pandemic has exposed weaknesses and revealed opportunities for improving retirement security,” Collinson said. “The insights gained can be applied toward effecting positive change. A concerted effort is needed among workers, employers, and policymakers.” 

She laid out several steps these stakeholders could take.

Workers can create a financial plan and gain 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 their business practices. These actions can aid employees in protecting their finances, saving for the future and managing work-life balance, and help employers attract and retain talent in today’s highly competitive market.

Policymakers can build on recent legislation by implementing 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 said. 

“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.”


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