How Each Workforce Sees Their Retirement in a Post-Pandemic World

The COVID-19 pandemic, along with turbulent markets in the past years, have heavily shaped consumer sentiment on financial wellness and have vastly shifted how investors envision future retirement.

So much so that new research by the Transamerica Center for Retirement Studies, in collaboration with Transamerica Institute, finds that 41% of workers believe future retirees will fare worse than those currently retired.

The 23rd Annual Transamerica Retirement Survey of Workers surveyed 5,725 workers over 18-years-old and analyzed how these investors think about their finances and retirement in a post-pandemic reality.

“These survey findings are a call to action to recognize the current financial fragility of workers and the imperative that we seek additional ways to support them in terms of their long-term retirement savings,” said Catherine Collinson, president and CEO of the Transamerica Institute, in an interview with 401(k) Specialist. “The pandemic brought many setbacks, and now workers are recovering from those setbacks, and at the same time, their time horizon to retirement is shorter than it was before the pandemic, simply due to the passage of time.”

Transamerica’s report details how the pandemic impacted each age group and how these workforces responded and offers recommendations for plan sponsors and policymakers to better employee financial wellness.

Generation Z

Those in Generation Z faced distinct challenges during the COVID-19 pandemic, as most were new in their careers when pay cuts, layoffs, and furloughs hit workforces in 2020. More than half (52%) of Gen Zers experienced one or more negative employment impacts because of the pandemic, and 42% were unemployed at some point during the pandemic.

Despite the tumultuous start in their careers, this workforce is likely to have even greater access to 401(k) and workforce retirement plans than previous groups because of today’s accessibility with retirement plans, reported Transamerica.

Furthermore, 66% of Generation Z workers are saving for retirement through a 401(k) and/or similar plans outside the workforce, and most began saving at age 19. Gen Z workers have also saved $29,000 in total household retirement accounts and $1,000 in emergency savings.

Still, 28% of Gen Z workers have dipped into their retirement savings by taking a hardship withdrawal or early withdrawal from a 401(k), a similar plan, or an individual retirement account (IRA).

As this group is likelier than all other age cohorts to dabble in self-employment at some point in their work lives, Collinson underscores how proper financial education is key to securing savings.

“One of the most important educational things that can happen overall is that they gain awareness of how the retirement landscape can work for them, regardless of their employment situation,” added Collinson. “To have a strong understanding of their employer-sponsored benefits, then what to do with their retirement accounts should they change employers, and if we can continue savings and investing on a tax-advantaged basis in times of self-employment.”


While those in Generation X were long regarded as the “sandwich generation,”—that title has now fallen on Millennial workers.

More Millennials are today sandwiched between the caregiving responsibilities of children on one side, and on the other, of aging parents. As they try to manage work-life balance, along with juggle setbacks caused by the pandemic, many are falling behind on their retirement savings, said Collinson.

According to Transamerica, 40% are currently serving and/or have served as a caregiver for a relative or friend during their career. Among them, almost nine in 10 (89%) made one or more adjustments to their employment ranging from missing days of work and reducing hours, to forgoing a promotion or quitting a job altogether.

Their current financial priorities range from paying off debt (60%), saving for retirement (52%), building emergency savings (46%), supporting children (44%), and supporting their parents (17%).

Collinson observes how Millennial workers can learn from the experiences of Gen X, including taking advantage of resources and tools offered by employers, retirement plan providers, or benefit providers. These workers can also look into employee assistance programs, adds Collinson.

“Especially among larger companies, benefits are more robust today than they were 10 or 15 years ago when Gen Xers were entering their sandwich years,” said Collinson. “There are more resources available, so that if they ever need to use them, they are already starting with some expectations of what could help them.”

Generation X

Due to a large absence of accessibility that saw pensions disappearing and 401(k)s just being introduced, more Gen X workers may have inadequately saved for their retirement, finds Transamerica research.

According to the findings, only 17% of Generation X workers are very confident they will be able to fully retire with a comfortable lifestyle, and just 24% “strongly agree” they are building a large enough retirement nest egg.

Forty percent of Gen Xers expect to retire at age 70 or older or do not plan to retire, and 54% plan to work in retirement. However, only 57% are focused on staying healthy and just 46% are keeping their job skills up to date.

Half of Generation X workers (50%) expect their primary source of retirement income to come from self-funded savings, including 401(k)s, 403(b)s, and IRAs (40%) or other savings and investments (10%). Twenty-six percent expect to primarily rely on Social Security. In fact, 80% are concerned that Social Security will not be there for them when they reach retirement—a finding that underscores the relevance behind proper education and reforms, Collinson comments.

“Many workers believe that Social Security is going bankrupt and won’t exist, which is not the case,” she remarked. “Demystifying Social Security should be a top priority. To help promote an understanding of the system, how it works, what to expect in terms of benefits, and how those benefits can be impacted through potential reforms to address the estimated depletion of the trust fund.”

“For workers of all ages, it’s not only important that they understand the system well enough to engage and follow discussions about reforms, but to readjust their own financial plans for retirement accordingly,” she continued.

Baby Boomers

Because Baby Boomers were already at mid-career when 401(k) plans were first introduced, many began saving for retirement at an older age—the median being at age 35. As a result, more are working past retirement age, and some believe they won’t retire at all.

Transamerica findings report that 49% of Boomers expect to or already are working past age 70 or do not plan to retire. Their greatest retirement fears are outliving their savings and investments (49%), declining health that requires long-term care (43%), and that Social Security will be reduced or cease to exist in the future (40%).

Forty-one percent of Baby Boomer workers expect Social Security to be their primary source of retirement income, while almost four in 10 (39%) expect to rely on income from 401(k)s, 403(b)s, and IRAs (28%) or other savings and investments (11%). Only 34% have a backup plan for income if forced into retirement sooner than expected.

Retirement planning solutions for the future

As more workers look to long-term planning resources, lifetime income solutions are gaining notoriety among those in the retirement industry, and even in recent legislation.

Among SECURE 2.0’s provisions include funding changes to qualified longevity annuity contracts, or QLACs, in an individual retirement account (IRA) or another qualified plan. The contract provides distributions to those after age 85, a time when most are concerned about running out of their retirement savings.

“The focus of building a steady stream of retirement income will be very interesting to workers,” said Collinson. “Part of the challenge that I see as a researcher is when we ask workers how much they’ve set aside in their total household retirement accounts, many have not satisfied enough to generate a meaningful stream of income in one of those guaranteed products.”

Coming out of the pandemic, Collinson underscores an opportunity for plan sponsors and lawmakers to assess the retirement landscape and understand where people currently stand in their savings. “We can learn from the experience in the pandemic and understand people’s vulnerabilities in a way that we haven’t understood before,” she concluded. “With that knowledge, we can inspire a whole new wave of innovation for industry retirement plan providers and plan sponsors, to enhance the retirement system and help more workers achieve a financially secure retirement.”

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