Various policy developments and long-term economic, social, and demographic trends raise worrisome questions about the financial security of future retirees. An erosion in employer-sponsored defined benefit pension coverage and the increase in Social Security’s full retirement age could shrink future benefits. Stagnating employment and earnings for men could threaten future retirement security, because retirement benefits and the capacity to save depend on lifetime earnings. The financial crisis, Great Recession, and collapse of the housing market in the second half of the previous decade could significantly disrupt retirement savings. This paper assesses retirement prospects for future generations, with a special focus on the late Generation-X and the Millennial generations. Because retirement outcomes depend on how much people earned and saved when they were younger, the analysis compares trends in employment, earnings, pension coverage, and wealth during working ages across cohorts, using data from the Current Population Survey and the Survey of Consumer Finances. The analysis also projects age-70 incomes for future generations using DYNASIM4, the Urban Institute’s dynamic microsimulation model.
Center for Retirement Research at Boston College
