Inflation and debt are squeezing retirement hopes across four generations

A new Transamerica Institute report says most U.S. workers feel the pressure of rising costs, while financial advisors are reaching only a small share of them.

Nearly eight in 10 American workers say the cost of living is making it harder to save for retirement, a troubling sign for financial advisors serving clients spread across four generations.

The findings come from Stressed and Strained: Four Generations Strive for Retirement Security by the nonprofit Transamerica Center for Retirement Studies (TCRS) in collaboration with Transamerica Institute. The survey, conducted by The Harris Poll among 6,153 workers at for-profit companies, is part of TCRS's 26th Annual Transamerica Retirement Survey, one of the largest and longest-running studies of its kind.

"The U.S. retirement system is evolving, and it now places more responsibility on workers to fund their retirement than it did for prior generations," said Catherine Collinson, CEO and president of Transamerica Institute and TCRS. "Uncertainty around Social Security's future, persistent inflation, competing priorities, and possible job disruptions are making it harder for workers to save, plan, and prepare. It is a perfect storm."

The data points to concerns that should worry advisors working with clients at every stage of their careers: 65% of workers say they could work until retirement and still not save enough, 73% fear Social Security may not be available when they need it, and 41% cite outliving their savings and investments as one of their biggest retirement worries.

Median total household retirement savings across all workers stand at $78,000, far below the $650,000 workers themselves say they will need to feel financially secure.

The generation-by-generation breakdown

The savings shortfall grows more severe across age groups. Generation Z workers, who make up 19% of the current workforce, have accumulated a median of $37,000 in household retirement savings. Half of Gen Z workers say they are struggling to make ends meet, 52% have a side hustle, and 28% hold more than one job. For many of them, paying down debt (56%) and building emergency savings (47%) come before retirement saving (40%). One in five Gen Z workers, or 22%, have already taken a hardship or early withdrawal from a 401(k) or IRA.

Millennials, the largest share of the workforce at 40%, report median retirement savings of $73,000. Nearly six in 10, or 58%, say debt is getting in the way of retirement saving, and 44% would rather not think about retirement investing until they are closer to their target date.

Generation X, now in their mid-40s to early 60s, shows the sharpest strain. Median savings are $113,000, and only 18% describe themselves as very confident that they will be able to retire comfortably. More than a third, or 36%, expect to retire at 70 or older, or not at all, and 53% plan to keep working into retirement.

With 77% of Gen X workers worried that Social Security will not be there when they retire, this group is relying heavily on self-funded savings, with 49% expecting 401(k)s, IRAs, or other personal savings to be their main source of retirement income.

Baby Boomers who are still working hold the largest balances, with median savings of $263,000, but 55% expect to retire at 70 or older or do not plan to retire at all. Four in 10, or 42%, expect Social Security to be their primary retirement income source, and fewer than three in 10, or 28%, have a written financial plan.

An advisory gap alongside the savings gap

The report also highlights a disconnect that advisors may be well placed to solve.

Although nearly six in 10 workers, or 59%, say they would rather rely on outside experts to monitor and manage their retirement savings, only 35% currently use a professional financial advisor. Instead, workers turn to family and friends (35%) and financial services institutions (32%) for personal finance guidance, sources that typically do not provide the structured, goal-based planning that advisors offer.

That gap has become more important as early withdrawals have become common across generations. Roughly one in five workers — including 22% of Gen Z, 20% of Millennials, and 17% of Gen X — have tapped retirement accounts early, a trend that poses a growing structural risk to long-term retirement readiness.

Only 27% of all workers have a written retirement financial strategy. Among those who do have an estimate of their savings target, 44% say they arrived at that number by guessing, while just 13% received it from a financial advisor.

Caregiver strain complicates the picture

One part of the retirement challenge that advisors may be underestimating is caregiving. More than one in three workers, or 36%, are serving or have served as unpaid caregivers during their careers, and 88% of those workers made at least one work-related change, from reducing hours to leaving a job entirely.

Thirty-five percent of caregiving workers say their financial situation has worsened because of it. For advisors building comprehensive plans, caregiving is becoming harder to overlook.

The report says employers have a role as well. TCRS recommends that plan sponsors encourage retirement plan loans instead of hardship withdrawals, offer phased retirement options, and expand support for caregiving employees.

"Retirement security is a shared responsibility among policymakers, employers, and individuals," Collinson said. "Success depends on workers' ability to earn income, support their families, and save for the future. It also depends on the strength of Social Security and Medicare, which face long-term funding issues."

For advisors, the report's message is straightforward: the clients most at risk are often the least likely to have sought professional help. Research on young savers and generational retirement gaps continues to show that early engagement makes a meaningful difference, yet only a third of workers are acting on that insight.