The Rise of Work and the Fall of Pensions

Boomers vs. Millennials as Generations Struggle to Figure Out their Retirement Plans

a Trendency Research Feature

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a Trendency Research original | Stefan Hankin | @LPstrategies

Recently, the Social Security Administration caused a stir with their announcement that the fund would run out of cash reserves by 2032. What this means exactly is up for debate and, unsurprisingly, there are many opinions out there on how to “fix” Social Security. But there is no denying that the way we view—and fund—our retirements have changed. Instead of looking into how to make retirement more secure, we thought it would be interesting to see what people are planning on when it comes to their own retirement.

To set the landscape we turned to the Transamerica Center for Retirement’s annual report. This year they found that 72 percent of Americans are looking forward to retirement, with Boomers (81%) leading the charge over Generation-X (70%) and Millennial Americans (68%). However, while looking forward to retirement, Americans are also becoming more pessimistic that they will have enough to retire. In fact, according to the latest report, 66% of Americans are feeling this way.

The Center for Retirement also found a growing trend in the number of different strategies Americans are counting on for income when they retire. Most notably, they found a new component of American retirement strategy is working, either full or part-time. Indeed, 36% of Americans plan on working, coming in behind Social Security (investment retirement accounts 401ks, IRAs, etc.), and personal accounts.


These are fascinating data points, but we decided to take a different angle on the question and not just ask which of these things are you planning, but how much are people really relying on Social Security and work for their retirement income.

We recently asked our national panels that very question. While the top line results line up with the Center’s study, we also got a much more in-depth look at what we are talking about in terms of income sources.

Much like the Center for Retirement, we found that three-quarters of Americans (76%) indicated that they are expecting at least 10% of their income to come from Social Security. However (as we can see the results from Trendency’s research below) while Social Security is clearly the primary source (31%) of planned retirement income, Americans, on average, are only banking on Social Security for a third of their retirement income.


Also, of interest was the fact that a quarter of Americans (26%) are banking on Social Security to cover 50% of their retirement income and 8% are planning on Social Security as their only income. This was interesting in and of itself, but once you start looking at the results by generation, we found the data fascinating. There is clearly a fundamental shift in how younger Americans view and are approaching their retirement in general.

If we look at the rank order of that, there is a drastic break between the top five retirement vehicles across generations. It’s apparent between today’s current retiring generation, Boomers, and the younger generations that are at a minimum about a decade away from retirement.

Retirement ranked order.png

Pensions are one of the biggest shifts, with Boomers viewing them as the second highest concentration of income. Pensions drop to 5th for Generation X and aren’t even in the picture by the time we get to Millennials. And while Social Security remains within the top two, the expected dependence among younger generations declines dramatically.


Boomers, on average, report that a little over a third of their retirement income will come from Social Security, while Gen Xers feel that about a quarter of their retirement funds will come from Social Security. Millennials are factoring in just 17% coming from Social Security, less than half of what Boomers are counting on. Unlike their parents, Millennials are planning on working well into retirement, and are also planning on being much more dependent on their own investments. Indeed, Millennials are expecting about a quarter of their retirement income (23%) to come from investments, compared to the 13% expectation of Boomers


We are halfway through Boomers’ retirement years, and the first of the Millennials won’t reach retirement age for another three decades, but it is clear that Millennials are banking on themselves and their investments much more than the generations ahead of them. Millennials currently provide the labor market with a younger and often cheaper labor force, which makes them more attractive than their older counterparts for similar jobs. But in 30 years, much like the Boomers of today, there will be two younger generations in addition to advances in technology and automation to compete with Millennials. In other words, that full or part-time work Millennials are banking on may or may not be there. Assuming this becomes a reality, it is likely Millennials will look to a higher percentage of their income coming from investments or Social Security.

There is clearly bound to be significant economic and political changes over the next few decades which will likely have profound effects on both the financial industry as well as the political world.

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