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Investment firm BlackRock’s latest Read on Retirement survey captures many of the uncertainties and growing anxieties Americans now face when planning for their golden years.
From a lack of financial literacy among Gen Z and the burden of student loans for millennials, to income security concerns among Gen X and baby boomers, it seems that retirement planning is more complex than ever.
Read on to find out how each generation is thinking about retirement and to see how many of BlackRock’s findings apply to you.
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Gen Z is confused
Gen Z may be the youngest generation in the workforce, but they’re seasoned vets when it comes to retirement worry. Roughly 63% of Gen Z workers admit they don’t understand enough about investments to confidently manage their own savings. It’s an important gap, as early investment decisions can have a profound impact on long-term wealth accumulation.
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Millennials would stay with employers offering 401(k) match for student loans
Millennials are juggling the dual pressures of managing near-term expenses and saving for the future. With millennial student loan borrowers reportedly carrying an average of around $40,000 in student loan debt, retirement often takes a backseat. BlackRock found that the majority (72%) of millennials would stay with their current employer if their 401(k) plan matched student loan payments.
Many companies offer help when it comes to helping workers pay down student loan debt. By offering student loan repayment matching programs, employers can improve employee loyalty by helping millennials manage their debt while simultaneously building their retirement savings.
Read more: Cost-of-living in America is still out of control — use these 3 ‘real assets’ to protect your wealth today, no matter what the US Fed does or says
Gen X is worried about Social Security
Gen X is both the most likely generation to report saving consistently for retirement and the least likely to feel on track. As retirement approaches, nearly 75% of Gen Xers believe they won’t have the same level of certainty about having enough in retirement savings as previous generations. This is possibly fueled by uncertainties around the sustainability of Social Security, the decline of traditional pension plans, and insufficient personal savings.
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Baby boomers seek secure income
For baby boomers, many of whom are already retired, the need for a secure income stream has new importance. According to BlackRock, 85% of retired boomers said having a guaranteed income in retirement is more crucial than they initially thought.
Due to market volatility, rising healthcare costs, and unanticipated financial pressures, many retirees are adjusting their spending and finding guaranteed income products like annuities increasingly appealing. AARP reports that annuity sales hit a record high of $385 billion in 2023, a 23% jump from the previous year, according to LIMRA, a research association serving life insurance and financial services companies.
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Retirement obstacles for women and independent savers
Women face unique challenges in retirement, and these concerns are reflected in the BlackRock survey. Sixty-five percent of women express worry about outliving their retirement savings, compared to just 57% of men.
Several factors may explain this, including longer life expectancy, the gender pay gap, and the impact of career breaks for caregiving.
The U.S. Centers for Disease Prevention and Control reports that women typically live about six years longer than men, which is the largest life expectancy gap in more than a quarter century.
Those without access to a workplace retirement plan need to make smart decisions with their money. About 56% of independent savers in BlackRock’s survey reported they are holding at least some of their retirement savings in cash. While cash may feel like a safe option, it often fails to keep pace with inflation, eroding purchasing power over time. Why not park that unused money in a high-yield savings vehicle instead?
Check out Moneywise’s Best High Yield Savings Accounts of 2024 to find some savvy savings options that earn you more than the national average of 0.4% APY.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.