The younger generations are more stressed out than their elders about having enough money for retirement, according to research by Bank of America Corp. (BAC) and Merrill Edge.

Despite having the most time ahead of them to save and invest, Millennials (67%) — folks born between 1982 and 2004 — and Generation X (74%) — born between 1965 and 1984 — are the most likely to anticipate financial stress in retirement based on how they are saving right now. Fifty-nine percent of retirees, meanwhile, are not stressed about finances because of how they saved and planned in advance. (For more, see: Tips for Gen X Savers at Age 50.)

Financial advisors should take note that while both generations take and took a similar approach when it comes preparing for retirement, generations Y and X need to be doing more. This includes seeking out professional financial advice.  

The research surveyed more than 1,000 Americans with investable assets of $50,000 to $250,000.

Having Enough

Seventy-three percent of retirees believe they will have enough money to last through retirement. Only 57% of those who haven’t retired yet have the same confidence. The majority (75%) of non-retirees also plan to rely on their own savings and investments to help fund retirement during their golden years. (For more, see: What Asset Allocation Should I Use for My Retirement Portfolio?)

“Perhaps one cause of this anticipated financial stress is that a large number of non-retired Americans believe they’ll need to rely on their personal savings and investment to live on in retirement,” said Aron Levine, head of Bank of America Preferred Banking and Merrill Edge, in a statement. “Even though current retirees report they are not as anxious about money, younger Americans can learn from their example — that preparation pays off.”

Not Doing Enough

The study found that the younger generations are taking steps that retirees did to prepare for retirement, but they could be doing more.

Only 24% of non-retirees are working with a financial advisor to reduce their retirement anxiety, compared to 38% of retirees who said they worked with an advisor before retiring to live free of financial stress in their golden years. (For more, see: Avoid These Top Retirement Savings Mistakes.)

The most popular steps generation Y and X are taking are funding retirement accounts (57%) and paying off debt (54%). These were also the most popular ways their elders planned for retirement but they did so at a higher rate. Sixty-three of retirees contributed to a retirement account and 68% paid off debt to stave off financial worries before reaching their current life stage.

Non-retired generations also lag behind older generations when it comes to investing outside a retirement account to plan for their golden years. Only 24% of non-retired survey respondents have invested as much as they can in a non-retirement account with the goal of being stress-free when they retire compared to 42% of retirees. (For more, see: How to Attract Millennial Investors.)

Stress Factors

Overall, the survey found that all generations are most likely to feel that stress would be placed on their finances by unexpected health care costs (65%), followed by a lack of Social Security funds (38%) and taking a loan from a 401(k) account (25%).

Not surprisingly, the older generations worry more about health care costs. Seventy-seven percent of seniors and 66% of Baby Boomers agree that unexpected health care costs would put a strain on their finances, compared to 55% of Generation Xers and 50% of Millennials.

Almost half (49%) of the non-retired younger generations plan to work in retirement and 28% expect to rely on help from the government to help fund their golden years. But only 20% of those who are already retired plan to work, while 41% currently rely on the government for financial help in their retirement. (For more, see: A Financial Advisor's Guide to Millennial Clients.)

How Millennial Views Differ

Millennials are counting on financial assistance from family during retirement much more than previous generations. More than four in 10 or 43% say they are planning to rely on financial assistance from loved ones if help is needed in retirement. This compares to just 9% of all other respondents combined. The study points out that the reason for the big difference may stem from the fact that 43% of Millennials say that they feel they're behind their peers in either financial stability, saving for the future or their income.

Generation Yers also have a different vision of how they plan to spend their retirement years. Two-thirds say that their ideal retirement includes traveling often and 54% say the same about living near loved ones. Fewer Gen X, Baby Boomers and seniors say their ideal retirement includes traveling (62%) and living near loved ones (46%). (For related reading, see: Now Is the Time to Snag Gen X Clients.)

The survey also reveals that Millennials are more tech-savvy when it comes to retirement planning than the older generations. More than one-quarter (27%) use web sites and apps to manage funds to plan for a more stress-free retirement, compared to 16% of Gen Xers, 11% of Baby Boomers and 5% of seniors. (For more, see: Guide to Retirement Planning for 40-Somethings.)

Stress, Embarrassment Motivate

Even though the overwhelming majority (85%) of non-retired Americans are investing for retirement, almost one-third (29%) of all who took part in the survey would still be embarrassed if their close friends or family knew intimate details of their finances — specifically their retirement savings, checking account balance, credit score, total wedding cost or monthly discretionary spending. Almost four in 10 (37%) feel that they lag behind their peers in terms of financial stability, saving for the future or current income. (For more, see: Money Habits of the Millennials.)

The research points out that these negative feelings could also serve as motivation for better financial planning. Nearly one-third of non-retirees have been motivated by financial stress, financial embarrassment or the feeling that they are behind their peers to make positive financial decisions. (For more, see: How Advisors Can Help Clients Stomach Volatility.)

“As demonstrated by the actions of current retirees, the key to success is turning these strong emotions of stress and fear into action,” Levine said.

The Bottom Line

Millennials and Generation X are much more stressed than their elders over whether or not they will have enough money when they retire. Despite taking the same steps as older generations, they need to be doing more. The good news for financial advisors catering to these generations is that stress and fear can be excellent motivators to do what is needed to plan for a financially comfortable retirement. (For more, see: 3 Ways Millennials Can Prepare for Retirement.)

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