Retirement Planning Highlights

Sarah F. Roach

For the past 19 years, the nonprofit Transamerica Center for Retirement Studies has surveyed workers about their expectations and plans surrounding retirement. The most recent survey, conducted in late 2018, employed a 25-minute online questionnaire that was taken by a nationally-representative sample of nearly 6,000 workers born between 1946 (“Baby Boomers”) and 2000 (“Millennials”). Naturally, “Generation X,” sandwiched in between, was also included. Here are some survey highlights.

On average, 72% of workers are looking forward to retirement, although older workers are more likely to feel this way than younger ones. That said, workers across generations feel that they’ll have a more difficult time achieving financial security in retirement than their parents did. Most are thinking in terms of longer life expectancies, and many anticipate pursuing active lifestyles, such as traveling, in retirement. However, not many are backing up those expectations with a focus on maintaining their health or planning for more years in retirement. At the same time, significant numbers expect to remain employed past the traditional retirement age of 65 and/or anticipate phasing in full retirement.

Typical Baby Boomers (born between 1946 and 1964) began saving in their mid-30s, plan to work—or are already working—past age 65, and have amassed an average retirement nest egg around $152,000. Only 26% say they have a backup plan should they be forced into retirement earlier than expected, and they report having emergency savings of around $10,000.

Gen-X’ers (born between 1965 and 1978) started saving a bit earlier, around age 30, and have saved around $66,000 for retirement. (They’ve had fewer years to save and fewer years for their investments to grow.) Somewhat alarmingly, nearly a third of Gen-X’ers report that they’ve taken a loan/withdrawal from their retirement plan, and they typically report having emergency savings of $5,000.

Finally, Millennials (born between 1979 and 2000) report that they began saving in their mid-20s. Unlike previous generations, more than half expect their retirements to be primarily self-funded. Nonetheless, 71% participate in employer-sponsored plans and contribute an average of 10% of their income to those plans. Millennials report discussing savings and investing with family and friends more often than do previous generations, and their retirement savings average around $23,000.

Interestingly, two-thirds of workers feel confident that they’ll be able to enjoy a comfortable lifestyle in retirement, despite the fact that only about half believe that they’re building an adequate nest egg. This disconnect may have to do with the fact that older workers are more likely to expect Social Security to be a primary source of retirement support, while both Gen-X and Millennial workers more commonly believe they will have to save for themselves. Distance from retirement may also influence expectations: The further away it is, the less tied to current reality one’s image of retirement may be. Whatever the reasoning, it is heartening that younger workers appear to be more focused on saving than their elders, but the persistently inadequate sizes of retirement nest eggs, especially among workers who have fewer working years left to save, remains concerning. Starting to save early and investing wisely are critical to retirement planning.