AT WORK SOLUTIONS • March 10, 2021

Retirement for 5 Generations

For the first time in history, the workforce consists of five generations of workers.

Creating a retirement solution that meets the needs of employees and encourages contributions isn’t just a good idea - it’s a strategic business decision. But, today’s workplace is evolving quickly.

As Boomers are retiring and Generation Z enter the workforce en masse, employers find themselves facing a critical question: How do we design a retirement solution offering that fits the needs of every stage of life?

5 Generations: From Silent to Gen Z

Across generations, preferences on money management, lifestyle and even the ideal retirement varies. Understanding the commonalities and differences of a diverse workforce can provide insight on plan features, support, education and outreach that’s most valuable to all employees.

Prefer phone or in-person communication

Average non-mortgage debt carried by this generation3

Requires flexibility for continued wellness

Likely the last generation to rely heavily on a defined benefit pension plan, this generation valued long-term employment with the same company. They tend to be overly optimistic about their social security benefits and retirement savings, while underestimating health care expenses post-retirement. They are the least likely to ask for help, but would benefit from individualized support to help them build financial security long-term. Providing education that can be shared or extended to spouses can help build engagement and solvency for the entire household. For ongoing financial training and support, ensure retirees are connected to in-person or phone resources via their pension provider, bank or credit union.

Directly impacted by the 2008 financial crisis

33% of pre-retirees plan on working in retirement4

45% have no retirement savings5

Baby Boomers are transitioning into or quickly approaching their retirement window. Like the generation before them, Boomers can sometimes overestimate social security benefits and the monthly income they’ll earn from retirement savings. Combined with the impact of the 2008 financial crisis and COVID-19, many Boomers are facing financial hardship in retirement and will likely need additional resources and education to create a clear plan for the transition. Providing access to a financial advisor who can offer guidance and establish clear goals can bolster confidence and retirement readiness.

Are focused paying down debt, versus saving for retirement6

Nearly 9 out of 10 Gen Xers are not on track to meet their retirement readiness goals7

Only 65% of Gen Xers are optimistic about retiring by the age of 658

Gen Xers are at the peak of their earning years, with anywhere from 15-30 years until retirement. Despite this, 69% are worried the money they have saved won’t be enough come retirement – and for good reason9. This “sandwich generation” is likely contending with the expenses of college-aged children and aging parents. Providing a robust retirement readiness solution and support in establishing lifetime income will be key for engagement with this group.

33% have already taken a loan or withdrawn money from their 401(k) in 202010

$23,000 is the median retirement savings for today’s millennials11

43% of Millennials expect to retire before the age of 6512

For the largest of the workplace generations, the pressure of “getting settled” — buying a home, marriage, kids, or professional development — can create conflict with retirement readiness. The 2008 recession, COVID-19, and an average of $33,00013 in student debt have made this group more likely to take a loan against their retirement than previous generations. Financial education around repayment plan options, loan consolidation, or student loan repayment benefits could make a substantive impact on retirement contributions.

25% are already carrying student loan debt14

53% of the Gen Z workforce prefers in-person contact rather than online tools15

35% say they plan to start saving for retirement in their 20’s16

For our youngest colleagues, retirement feels far away, but money management is a key concern. 71% of Gen Z report that finances stress them out.17 88% report they are actively saving on a monthly basis.18 But, as early entrants to the job market, COVID-19 has put the brakes on many of their big plans. For the Gen Z (and Millennial) workforce, providing education, planning tools, and offering retirement plans with age and risk-tolerance based investing solutions — like target date funds — can help set them up for success over the long term.

The Key Characteristics of a Personalized Retirement Plan

Designing a retirement solution that fits the full range needs of a diverse workforce can feel daunting at best. However, there are a few key components that can help make your retirement benefits work harder for all employees.


Despite the generational differences, one thing is common: Participants’ desire for a knowledgeable professional to help guide them through the unknowns of retirement. Experienced Financial Advisors can provide insight around financial decision making, education on how to plan effectively, and guidance on available options.

Content & Education

Financial anything can be inundating and complex. For this reason, providing a retirement solution that offers a wide range of self-directed content and education — both on site and digital — is important. Content offered should work to provide guidance to the wide range of decisions that come at various points across generations.

Planning Tools & Investment Solutions

Regardless of life stage, the single most essential requirement for reaching retirement readiness is planning early and often. Be sure that the resources available to your workforce includes tools and investment solutions that allow for wealth planning — both near and long-term — and take into account holistic financial health and resiliency for a 360-view of financial wellness.

When Employees Thrive, Companies Thrive.

For businesses, providing retirement benefits is a strategic decision — with implications for talent retention, competitive positioning in the market, and culture. With a workforce spanning five generations, creating an innovative retirement benefits plan that helps meet the individual needs and challenges of a multigenerational workforce is critical to the plan's success. Connect with Morgan Stanley at Work today – one of our Financial Advisors can help you to understand how you can make sure every generation in your workforce has the support and resources they need to reach their unique goals for retirement.

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1 Pew Research, Millennials are Largest Generation in Workforce, 2018
2 Engaging the Workforce of the Future. Randstad. p.15
3 Experian, State of Credit 2020 Report
4 USA Today, Money, Baby Boomers Believe They Will Have Better Retirement Than Their Parents, Kids, 2020
5 Insured Retirement Institute, 2019 Report
6 Business Insider, Even 40-Something Americans Who Know They Should Be Saving for Retirement are Too Mired in Debt to do it
7 DHJJ Financial Advisors, 5 Ways Gen X Can Catch Up on Retirement Savings
8 DHJJ Financial Advisors, 5 Ways Gen X Can Catch Up on Retirement Savings
9 Gen X Facing Stark Reality of Retirement, Plan Advisor, 2020
10 Next Advisor, Time, Millennials are Sabatoging Their Retirement, 2020
11 Next Advisor, Time, Millennials are Sabatoging Their Retirement, 2020
12 Better by Today, T. Rowe Price, Millennials are Determined to Retire Early, 2019
13 A Look At Millennial Student Debt
14 Northwestern Mutual, Planning & Progress Study 2020
15 Plan Sponsor, Introducing Gen Z to Retirement, 2020
16 Plan Sponsor, Introducing Gen Z to Retirement, 2020
17 Plan Sponsor, Introducing Gen Z to Retirement, 2020
18 Employee Retirement Preparedness: Millennials & Gen Z 2020


This material does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The strategies and/or investments discussed in this material may not be appropriate for all investors. Morgan Stanley Wealth Management recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a Financial Advisor. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.

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Investments in target-date funds are subject to the risks associated with their underlying funds. The year in the fund name refers to the approximate year (the target date) when an investor in the fund would retire and leave the workforce. The fund will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. An investment in a target date fund is not guaranteed at any time, including or after the target date. These funds are based on an estimated retirement age of approximately 65. Should you choose to retire significantly earlier or later, you may want to consider a fund with an asset allocation more appropriate to your particular situation.

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