Catherine Collinson, president and CEO of the Transamerica Institute and Transamerica Center for Retirement Studies, discussed the pandemic’s impact on four generations of workers during Wednesday’s portion of the American Council of Life Insurers annual conference.
Although most of the workers surveyed appeared to be upbeat about their personal lives, 40% said they often feel anxious and depressed while 37% said they have trouble making ends meet.
More than one in four surveyed (43%) experienced one or more negative impacts from the pandemic. Of these, 27% had their work hours reduced, 14% took a salary cut, 10% were furloughed, 8% were laid off and 4% retired. Generation Z workers were the most likely to be affected, with 59% reporting a negative financial impact, while baby boomers were the least likely to be financially hurt by the pandemic (30%).
Only 24% of those surveyed said they are confident they will be able to fully retire with a comfortable lifestyle. Millennials (30%) are more likely to be “very” confident than boomers (21%), Generation X (19%) and Gen Z (16%). Sixteen percent of workers across generations indicate their retirement confidence declined as a result of the pandemic.
Looking at their expected sources of retirement income, 71% plan to take income from 401(k) or 403(b) accounts or individual retirement accounts, 66% expect to receive Social Security and 37% plan to continue working. This high percentage of workers who plan to extend their working years led Collinson to describe job earnings as the “fourth leg” in what usually is called the three-legged retirement income stool (Social Security and government programs, pensions or employment savings plans, and individual savings).
Eighty-two percent of workers are saving for retirement through employer-sponsored plans, such as a 401(k) or similar plan, or an individual plan, the survey showed. But retirement savings may be inadequate. Total estimated median household retirement savings among all workers is $93,000. Boomer workers have the most retirement savings with a median of $202,000, compared with Gen X ($107,000) millennials ($68,000) and Gen Z ($26,000).
Collinson listed 10 ways to strengthen retirement security. They are:
Address Social Security and Medicare funding issues.
Ensure accessible and affordable health care for all.
Engage leaders from across sectors and disciplines to collaborate, innovate and implement financing and delivery models for long-term care.
Support family caregivers.
Further incentivize small companies to offer employee benefits.
Enhance existing tax incentives for workers to save for retirement.
Facilitate retirement savings to last a lifetime.
Encourage employees to implement age-friendly business practices as part of their diversity, equity and inclusion efforts.
Bridge the digital divide.
Promote lifelong learning.
Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected]. Follow her on Twitter @INNsusan.