What Will Retirement Look Like for Future Generations?

Many MPERS retirees spent decades working toward a goal that remains at the heart of retirement: financial security.

For many public employees, that security includes a pension, Social Security, and personal savings. Together, those sources of income help create a stable foundation for retirement.

But retirement is changing.

According to a recent Investopedia article, more than half of today’s retirees receive pension income, even though only about 29% of current workers participate in a traditional pension plan. That means many future retirees may enter retirement with a very different set of financial resources than previous generations.

For workers without a pension, retirement often depends more heavily on personal savings and investment accounts such as 401(k)s and IRAs. Those accounts can be powerful tools for building retirement income, but they also place more responsibility on the individual worker. How much to save, how to invest, and how to turn savings into income during retirement become important personal decisions.

As a result, many Americans are thinking more about retirement security. A recent national survey found that 80% of Americans believe the nation faces a retirement crisis, while 61% are concerned about achieving financial security in retirement. Respondents cited rising costs, inflation, market volatility, and uncertainty about future retirement income as major concerns.

What’s particularly interesting is how Americans view pensions.

• 76% of Americans have a favorable view of pension benefits.
• Nearly seven in ten Americans believe pensions do more than 401(k)-style plans to help workers achieve retirement security.
• 57% of workers would choose a job offering a pension over an otherwise similar job that offered only a retirement savings plan.

Those findings suggest that while retirement plans have evolved, people’s goals have not.

Whether they work in public service, the private sector, or somewhere in between, workers still want confidence that they will be able to retire comfortably after a lifetime of work. They want reliable income, financial stability, and the ability to enjoy retirement with fewer worries about money.

Today’s retirement plans look different from those available to previous generations, and future plans may continue to evolve as workers seek financial security.

For many MPERS retirees, retirement security is something they spent a career building. Through years of service, they earned a pension designed to provide dependable income throughout retirement.

For their children and grandchildren, the path may look different. Many will rely more heavily on personal savings and investment accounts than previous generations.

Yet recent research suggests Americans still place a high value on retirement security and predictable income. More than three-fourths of Americans report favorable views of pensions, and a majority of workers say they would choose a job with a pension over a similar job without one.

Retirement has changed dramatically over the past century and may continue to evolve in the years ahead. But one lesson seems to endure across generations: people want confidence that after a lifetime of work, they can retire with dignity, independence, and financial security.

How future generations achieve that goal remains to be seen. But if history tells us anything, it is that workers, employers, and policymakers all continue to search for better ways to create a secure retirement for future generations.