The NCSL Blog


By Anna Petrini

A generation of feckless job-hoppers, spending extravagantly while mired in student loan debt?

Millennial retirement blogStereotypes about millennials’ sense of entitlement and lack of financial sophistication abound. While new research debunks some myths about this generation, it paints a less than rosy picture of millennials’ prospects for a secure retirement.

They entered the workforce at a time of depressed wages and high unemployment, stumbling right out of the gate into the depths of the Great Recession, greeted by tectonic shifts in the labor market.

For decades, most U.S. job growth has been in lower-wage, lower-skilled, temporary and short-term occupations. Thanks to some harsh economic realities, millennials have accumulated about half the wealth their parents had at the same stage of life, according to a new report from the National Institute on Retirement Security (NIRS).

The NIRS report analyzes Census Bureau data to reveal some stark facts. Two-thirds of working millennials have nothing saved for retirement. Only 5 percent of working millennials are saving enough to retire comfortably. Because of low rates of access to and eligibility for employer-sponsored retirement plans, millennial Latinos participate at half the rate of whites.

Though millennials will live longer than Gen Xers and boomers, when they retire, they’re likely to see less of their income replaced by traditional sources like Social Security and defined benefit pensions. Some financial experts suggest millennials will need to put aside 15 percent of salary or more, far exceeding recommendations for previous generations.

Still, there’s hope. Across all racial and ethnic groups, more than 90 percent of millennials actually participate in employer-sponsored plans when they are eligible, according to NIRS.

Greater educational attainment typically yields higher earnings and increased access to retirement plans. Millennials belong to the most educated and diverse generation in U.S. history. Gen X and millennial women have worked and earned more in their 20s and 30s than now-retired women did at those ages, and recent research projects that the median age-70 income will be higher for millennials and Gen Xers than for previous cohorts.

The Insured Retirement Institute’s (IRI’s) 2017 survey of how millennials perceive and prepare for retirement confirms that members of this generation have a strong sense of responsibility for their own retirement fortunes—with more than half anticipating that their meaningful income will come from a workplace retirement account and 45 percent looking to personal savings. About 40 percent expect regular full- or part-time employment to figure prominently in their retirement income equation.

And while shoring up Social Security and bucking some long-term economic, social and demographic trends may require Herculean efforts, policymakers trying to aid millennials can certainly explore lighter lifts, like enhancing financial literacy around the value of employer matches and the Saver’s Credit.

A coalition of prominent education, consumer advocacy and financial services organizations highlights the importance of comprehensive retirement planning for millennials and others during National Retirement Planning Week, April 9-13, 2018. Led by IRI, the coalition has collected an array of resources to help consumers and financial professionals focus on long-term financial goals. Check out these tools, available year-round.

Anna Petrini is a policy specialist in NCSL’s Employment, Labor and Retirement Program.

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About the NCSL Blog

This blog offers updates on the National Conference of State Legislatures' research and training, the latest on federalism and the state legislative institution, and posts about state legislators and legislative staff. The blog is edited by NCSL staff and written primarily by NCSL's experts on public policy and the state legislative institution.