Skeptical on Social Security, younger workers shift to personal retirement accounts

Full Article: Financial Planning – Skeptical on Social Security, younger workers shift to personal retirement accounts

A growing skepticism about the future availability of Social Security benefits is prompting younger workers, particularly millennials, to prioritize personal retirement savings over reliance on government programs. According to a study by Cerulli Associates, while 56% of current retirees depend primarily on Social Security for their income, only 6% of millennial 401(k) participants expect to do the same. Instead, 58% of millennials anticipate that personal retirement accounts will be their main source of income during retirement. This trend reflects a broader generational shift towards self-reliance in retirement planning, driven by concerns over the long-term sustainability of Social Security. 

Key Takeaways:

1. Generational Differences in Retirement Planning: Younger workers are increasingly doubtful about the future of Social Security and are focusing more on building personal retirement savings. financial-planning.com
2. Millennials’ Retirement Income Expectations: A significant majority of millennials (58%) expect personal retirement accounts to be their primary source of income in retirement, with minimal reliance on Social Security. financial-planning.com
3. Current Retirees’ Dependence on Social Security: In contrast, over half of current retirees (56%) rely on Social Security as their main income source, highlighting a shift in expectations between generations. financial-planning.com
4. Advisors’ Observations: Financial advisors have noted this generational shift, with younger clients expressing a desire to control their retirement outcomes through personal savings rather than depending on government programs. financial-planning.com
5. Implications for Financial Planning: This trend underscores the importance of personalized retirement planning and the need for advisors to address the unique concerns and strategies of younger clients who are skeptical about Social Security’s future. financial-planning.com

Overall, the data suggests a significant change in how different generations perceive and plan for retirement, with younger workers taking proactive steps to ensure financial security independent of Social Security benefits.