When it comes to retirement plans, every generation has in some way been impacted by the COVID-19 pandemic. Millennials, GenXers, and Boomers all got hit financially.
Millennials grew up during a time of seeing their parents struggle with the Great Recession. Although many of them went to college to get good jobs, they went into the workforce with crippling loan debt. Many people in this age group don’t think Social Security will survive long enough for them to benefit from it. This increases their worry about being able to save enough for retirement on their own, and what that retirement will look like. Their worry may, in some part, be unwarranted. Millennials who started investing early have been able to take part in a bull market that has been one of the longest in the history of the market.
Most people in Generation X can remember the good times when pensions were prevalent in most industries. They were unfortunately just on the cusp of being too late to the game to participate. As such, they had to take care of their own retirement, mainly in a 401(k), many of which saw a significant decline during the Great Recession. Many of these people are now in the ‘sandwich generation’ that is experiencing having to take care of their children along with aging parents. Although there’s been a bull market for a long stretch, many in this group haven’t been able to gain back what they lost. Now, with COVID-19 and all of the problems it has caused, such as job loss and the ability to save, they are now in more of a predicament with their retirement savings than ever before.
Baby boomers had been well along in their careers working towards a good pension when 401(k)s began to replace pension plans. Although many had pensions, they also began to save on their own in order to make the most of their retirement. As with the GenXers, the Great Recession also hit hard. It affected their bottom line, but unlike younger generations, they have less time to make up the difference. Due to their age, many in this group are more likely than their younger counterparts to be laid off or let go if the company can’t afford to go back to full staff. Members in this age group have lost jobs at a similar rate to Millennials.
Although the pandemic has impacted jobs and savings, many people in all age groups feel optimistic about how retirement will look when they reach that milestone. The Transamerica Center for Retirement Studies asked people to respond to a survey stating how they felt about retirement. Of those who responded, 70% said they are looking forward to retirement. People who want to travel during retirement came in at 65%, while 57% plan on spending time with family, and 46% are looking forward to pursuing a hobby.
Saving enough for retirement is something all generations worry about, although 60% think they are saving enough. Of the millennials who responded, they said they "somewhat agree" or "mostly agree" they are saving enough. Of the GenXers, 59% agreed, while 60% of Baby Boomers felt the same.
To ward off worry about retirement, there are things employers can do to help. Many offer 401(k) plans, which is a great start. However, there’s other options that can help companies assist their employees with retirement. Having a financial wellness program in place teaches about all things financial, including retirement, savings, healthcare and more. The more an employee feels good about their financial life, the less stress they have overall. Phased retirements, where employees go from working full-time for the company to part-time, can also help for those struggling with leaving.