Flexibility is key for today’s 20-somethings, as the changing nature of work and the pandemic put pressure on traditional approaches to retirement, according to the Transamerica Center for Retirement Studies.
“Navigating our 20s was a struggle before the pandemic. Now, many of us are in a more precarious financial situation,” Heidi Cho, a millennial retirement expert for nonprofit Transamerica Center for Retirement Studies, said in a statement in January. “From high rates of student debt and unemployment to unaffordable housing, a variety of factors are stacking against young Americans’ ability to achieve long-term financial security.”
Transamerica collaborated with Aegon on its 2020 retirement survey. The survey was conducted prior to the pandemic, but findings show that younger workers shifting financial and life priorities are in conflict. 20-something workers re balancing life priorities like advancing their careers, enjoying life and planning for their financial future, while also trying to cover basic living expenses, buy a home, support a family and pay off debt.
“Young adults are reinventing life, work and retirement to infuse flexibility. With the potential to live longer, we have more time to pursue our passions, embark on different careers, and possibly take gap years,” Cho said.
Young workers are more likely to be self-employed than other workers, the report found, and many – men and women – anticipate significant career breaks for raising families, relaxing or traveling. Almost 70% say they expect to change careers more than any other generation. Fifty-two percent expect to spend between one and five years with an employer, more than twice as many as any other generation who agreed.
“Structural changes in the job market, changes in the way young adults see their lives and careers unfolding, and the increasingly fleeting relationship between employers and employees will have implications for retirement savings,” according to the report.
Young workers were more likely than older cohorts to associate retirement with negative feelings like loneliness and boredom. Almost two-thirds say that they’ll ease into retirement by continuing to work in some way. When a person’s retirement age and life expectancy are both moving targets, the report noted, it’s hard to know how much young workers will need to save.
Young workers are surprisingly receptive to retirement conversations. Only 20% see retirement as “far away,” and 40% of U.S. workers in their 20s say they are habitual savers. Despite the tenuous connection to employers throughout their working lives, the report found an employer-sponsored plan is usually their first step into retirement planning.