Inflation, Debt, and Uncertainty Are Undermining Retirement Readiness

Workers are carrying more of the burden for financing retirement than earlier generations did, and rising uncertainty around Social Security, persistent inflation, competing financial demands, and possible job disruptions are making it harder to save and plan, according to Catherine Collinson, CEO and president of Transamerica Institute and TCRS. “It is a perfect storm,” she said.

Nearly two-thirds of workers, or 65%, say they may work until retirement and still not save enough to cover their needs. Seventy-three percent worry that Social Security will not be available when they are ready to retire, and 41% say one of their biggest retirement fears is outliving their savings and investments.

Stressed and Strained: Four Generations Strive for Retirement Security is a survey-based research report that examines retirement preparedness across Generation Z, Millennials, Generation X, and Baby Boomers. It looks at workers' health and well-being, employment, finances, and outlook for retirement.

Generation Z (Born 1997 to 2012)

Collinson said Generation Z is entering the workforce during a period of major change, making it especially important for younger workers to build a financial foundation early so retirement savings can grow over time. At the same time, many are balancing work with family obligations that may slow their progress.

Among Generation Z workers age 18 and older, the survey found:

• Half of Gen Z workers, 50%, are struggling to make ends meet. Twenty-eight percent have more than one job, and 52% have a side hustle.
• Their top financial priorities include paying off debt (56%), building emergency savings (47%), saving for a major purchase or life event (47%), saving for retirement (40%), and covering basic living expenses (40%). Twenty-five percent also say supporting their parents is a priority.
• One in three Gen Z workers, 34%, are currently serving or have served as caregivers for a relative or friend during their working years. Among them, 90% have adjusted their work situation in some way because of caregiving, including missing work, reducing hours, passing up a promotion, or leaving a job.
• Gen Z workers have an estimated median of $37,000 in total household retirement accounts. One in five, or 22%, have taken hardship and/or early withdrawals from a 401(k)-type plan or IRA.

Millennials (Born 1981 to 1996)

Millennials are often in their thirties through mid-forties and may be juggling careers, child-rearing, and care for aging parents. Collinson said that with so many demands competing for attention, retirement planning can be difficult, but even modest steps now can pay off later.

The survey found:

• Almost six in 10 Millennial workers, 58%, say debt is affecting their ability to save for retirement, and 44% would rather avoid thinking about retirement investing until they are closer to retirement age.
• Their current priorities include paying off debt (61%), saving for retirement (54%), building emergency savings (47%), supporting children (45%), and saving for a major purchase or life event (40%). Sixteen percent say supporting parents is a financial priority.
• Thirty-seven percent of Millennial workers are currently serving or have served as caregivers, and 90% of them made changes to their employment because of caregiving.
• Millennials have an estimated median of $73,000 saved in total household retirement accounts. One in five, or 20%, have taken hardship and/or early withdrawals from a 401(k)-type plan or IRA.

Generation X (Born 1965 to 1980)

Collinson said Generation X is moving into its sixties and approaching retirement, but many are still behind on savings. She noted that persistent inflation makes that especially troubling. Many plan to work longer and retire later to close the gap, though their success will depend on both financial planning and their ability to preserve their health and employability.

The survey found:

• Only 18% of Generation X workers are very confident they will fully retire with a comfortable lifestyle, and 25% strongly agree they are building a large enough retirement nest egg.
• More than one in three, 36%, expect to retire at age 70 or older or do not plan to retire at all, and 53% expect to keep working during retirement.
• Nearly half, 49%, expect their main source of retirement income to come from self-funded savings, including 401(k)s, 403(b)s, and IRAs (38%) or other savings and investments (11%). Twenty-seven percent expect Social Security to be their main source, 11% expect income from continued work, and 5% expect a company-funded pension.
• Generation X workers have an estimated median of $113,000 in total household retirement accounts. Seventeen percent have taken a hardship withdrawal or early withdrawal from a 401(k)-type plan or IRA.

Baby Boomers (Born 1946 to 1964)

According to Collinson, the youngest Baby Boomers are in their early sixties and the oldest are turning 80. For those still working, she said, later-life employment is becoming more common, but health and job instability make contingency planning essential in case retirement happens sooner than expected.

The survey found:

• More than half of Baby Boomer workers, 55%, expect to retire at age 70 or older or do not plan to retire.
• Forty-two percent expect Social Security to be their primary source of retirement income, while 27% expect to rely mainly on 401(k)s, 403(b)s, and IRAs, and 15% on other savings and investments. Seven percent expect income from continued work, and 5% from a company pension.
• Baby Boomer workers have an estimated median of $263,000 in total household retirement accounts. Eleven percent have taken a hardship or early withdrawal from a 401(k)-type plan or IRA.
• Twenty-eight percent have a written financial strategy for retirement, and 15% regularly discuss saving, investing, and retirement planning with family and close friends.

Strengthening Retirement Security

Collinson said retirement security is a shared responsibility that involves policymakers, employers, and individuals. She said a strong retirement system depends on a healthy economy, a strong labor market, access to workplace retirement plans, and a cost of living people can afford.

“Everyone should have the ability to retire with dignity,” she said. Success, she added, depends on workers' ability to earn income, support their families, and save for the future, as well as on the long-term stability of Social Security and Medicare, both of which face funding challenges.

Stressed and Strained: Four Generations Strive for Retirement Security is part of the 26^th Annual Retirement Survey, one of the largest and longest-running surveys of its kind. It includes recommendations for workers, employers, and policymakers. The report is available at www.transamericainstitute.org. Follow on LinkedIn, Facebook, and X @TI_insights and @TCRStudies.

About Transamerica Center for Retirement Studies
Transamerica Center for Retirement Studies (TCRS) is a division of Transamerica Institute, a nonprofit private operating foundation. TCRS conducts one of the largest and longest-running annual retirement surveys of its kind. The information provided here is for educational purposes only and should not be construed as insurance, securities, ERISA, tax, investment, legal, medical, or financial advice or guidance. Please consult independent professionals for answers to your specific questions. www.transamericainstitute.org

About the 26th Annual Transamerica Retirement Survey
The analysis in Stressed and Strained: Four Generations Strive for Retirement Security was prepared internally by the research team at Transamerica Institute and TCRS. The research was conducted online in the U.S. by The Harris Poll on behalf of Transamerica Institute and TCRS among 6,153 workers in for-profit companies employing one or more employees. The survey was conducted in the latter part of the year. Data were weighted where necessary by age, gender, race/ethnicity, region, education, marital status, household size, household income, and smoking status to reflect their actual proportions in the population. Respondents were selected from among those who had agreed to participate in surveys. The sampling precision of Harris online polls is measured using a Bayesian credible interval. For this study, the sample data is accurate to within ±1.8 percentage points at a 95% confidence level. The credible interval is wider for subsets of the surveyed population. All sample surveys and polls, whether or not they use probability sampling, are subject to other sources of error that are often not possible to quantify or estimate, including coverage error, nonresponse error, question wording and response options, and post-survey weighting and adjustments.

Media Contact: Kyle Moschen
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