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Retirement Readiness: A Generational Perspective

Thursday, April 9, 2020

By Steve Arves, Manager, Financial Health Network

The economic fallout from the COVID-19 pandemic has taken an exacting toll on many people’s retirement savings. Over the last month, the stock market took its largest dip in years, wiping out trillions of dollars in savings overnight. While it’s too soon to say whether these losses will be recouped in the coming months, it’s clear that economic boom times are over. This will present challenges to millions of Americans of all ages who are struggling to save money for retirement. That’s why it’s crucial for employers to step up by offering well-designed products that can help workers build and maintain retirement savings now and in the future.

Unique Challenges by Generation

For the last few decades, financial worries about retirement have been the top financial concern among people in America.¹ According to 2019 data from the U.S. Financial Health Pulse, 61% of Americans lack confidence in their ability to meet their long-term financial goals. Millennials and members of Generation X are even less confident than the general population (65% and 66%, respectively), while baby boomers are slightly more confident (54%). Although members of each generational cohort face similar challenges, such as stagnant wages and high living costs, certain factors make their struggles unique (Figure 1):

  • Millennials (born 1981–1996) entered the labor market during the Great Recession and with substantial student debt. Many millennials are postponing things like saving for retirement, buying a home, or starting a family. According to the Pulse, more than 40% of millennials have no retirement savings at all.
  • Generation X (born 1965–1980) is the “sandwich generation,” balancing care for their children and their aging parents. Families in this generation have lower homeownership rates and lower median net worth than previous generations. Nearly 30% of Generation X has no money saved for retirement.²
  • Baby Boomers (born 1946–1964) are rapidly retiring and therefore likely to be hardest hit by an economic downturn. An estimated 10,000 members of this generational cohort will retire each day between now and 2030. They will account for a greater percentage of the overall U.S. population than previous generations. Yet, we find that 30% of baby boomers have no retirement savings.

Figure 1: Individuals with No Retirement Savings, by Generation

Financial Wellness in the Workplace

Nearly three-quarters of Pulse respondents who have employer-provided plans contribute to them regularly. By generation, millennials and Generation X (79% each) are more likely to contribute to these plans than baby boomers (62%) (Figure 2).

Figure 2: Individuals with Employer-Provided Plans Who are Contributing to Them Regularly, By Generation

Unfortunately, many people do not have retirement accounts provided through their employers. Only half of all workers (49%) save in defined-contribution employer-provided retirement accounts, such as 401(k)s or Thrift Savings Plans (TSPs). The largest proportion by generation is Generation X, 60% of whom have these types of accounts, followed by millennials (55%) and baby boomers (47%) (Figure 3). Baby boomers are more likely to use employer-provided defined-benefit plans, such as pensions, that better shield them from financial risk. Still, only one-quarter of all employees use these plans, with the proportion decreasing with each generation: 37% for baby boomers, 26% for Generation X, and only 14% for millennials (Figure 3).

Figure 3: Individuals with Employer-Provided Retirements Plans, by Type of Plan and Generation

Employer-Provided Solutions

Employers are uniquely positioned to help their employees save for retirement by providing access to well-designed savings vehicles in the workplace. Employees are 15 times more likely to save for retirement if they have access to automatic-deduction employer-provided retirement savings plans. Additionally, certain “nudges” from employer- sponsored programs — such as automatic enrollment, automatic escalation, and qualified default investment alternatives (QDIA) — help employees save at higher rates. In fact, 92% of employees will participate if those plans include automatic enrollment.³

Taking a holistic approach to improving employee financial health also helps employees save for retirement. As we detailed in a previous report, we recommend that employers should provide access to safe and affordable financial products that better enable employees to spend, save, borrow, and plan. In turn, these products help employees build the foundation for financially healthy futures. For example, employers can partner with organizations such as SaverLife that help employees build up emergency savings and avoid taking on extensive debt.

Better for Employees, Better for Business

While employers work to address the immediate needs of a workforce that is now largely remote and struggling to balance work with childcare responsibilities, they shouldn’t lose sight of the long term. Helping employees save for retirement is likely to pay off in the form of higher employee engagement, loyalty, and productivity. In the coming months, the Financial Health Network will release new tools, tips, and guidance that employers can use to help employees address the unique needs of this moment and save for the future.


¹ See Dugan 2014 for 2000–2014 results, Saad 2015 for 2015 results, McCarthy 2016 for 2016 results, McCarthy 2017 for 2017 results, Saad 2018 for 2018 figures, and Tarrance 2019 for 2019 figures. Not being able to pay for a medical cost tied for number one in 2017 and 2018.

² Unless otherwise noted, data cited in this post comes from the U.S. Financial Health Pulse 2019 Trends Report.

³ Employees are automatically enrolled in these programs but have the ability to opt out.


This post is a part of a series using data from the 2019 U.S. Financial Health Pulse. In the coming months, we plan to discuss different cuts of the data and respond to compelling questions and feedback we receive from our readers. To learn more about the U.S. Financial Health Pulse and how you can get involved, please visit www.finhealthnetwork.org/pulse.

The U.S. Financial Health Pulse is made possible through a founding partnership with Flourish, a venture of The Omidyar Group. Additional support is provided by MetLife Foundation, founding sponsor of the Financial Health Network’s financial health work, and AARP. The Financial Health Network is partnering with the University of Southern California Dornsife Center for Economic and Social Research (CESR) to field the study to their online panel, the Understanding America Study. The Financial Health Network is also working with engineers and data analysts at Plaid to collect and analyze transactional and account data from study participants who authorize it.

By Financial Health Network on April 9, 2020.

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