Concern over Social Security continues to weigh on the minds of Americans. Seventy-seven percent of Americans are concerned for its future and more than half think it will run out by the time they reach retirement.
"Americans anticipate having to work longer, as their nest eggs have been shrinking and the economy has made it harder to save," said Chris X. Moloney, Scottrade’s chief marketing officer and executive director of customer intelligence. "Factor in the fear regarding the future of Social Security, and you have an unprecedented tsunami of retirement challenges."
Boomers (67 percent) and Gen Xers (64 percent) are the generations most concerned about having enough money for retirement, but other primary concerns differ significantly among generations.
"Boomers have been hit the hardest by the current downturn and have the least time to recover. As a result, nearly 75 percent of Boomers fear full retirement will not be an option for them," Moloney said. "Although Gen Xers have more time to save, their deep fears about retirement parallel Boomers’ because increased stress around managing day-to-day expenses is threatening their ability to save."
Gen Y Has a Different View
"Gen Y is an anomaly," Moloney added. "They are actually slightly more confident this year that they will be able to save enough to fully retire - even though the amount they have saved has declined and more of them are concerned that Social Security will fall short. This research shows that Gen Y is fueled by a marked optimism that is unique to their generation."
Another significant discrepancy among the generations is in retirement planning. The difference between those who do their own retirement planning versus those who use a professional financial advisor is far more pronounced for Gen Y than other generations (28 percent plan independently; 5 percent use an advisor).
"Gen Y is the Internet generation," Moloney said. "There are few things they feel they can’t do on their own. They’re more likely to turn to their iPhones for retirement help than to an advisor. Other generations are excited about the evolution of online tools, research and educational resources like those that Scottrade provides, but growing up with these options has made Gen Y used to an independent approach."
Reducing Financial Stress
The generation gap closes when it comes to how Americans are reducing financial stress. Across all generations, the top way they are addressing concerns is spending less. Gen X is taking the most action and leads the generations in using coupons (66 percent), cutting back on entertainment (65 percent), paying down debts (57 percent) and reducing credit card spending (55 percent). Boomers lead the pack in comparison shopping (70 percent), and Gen Yers lead when it comes to focus on increasing income, with 30 percent working more to earn more and 29 percent looking for a higher paying job.
"Spending less is a normal reaction in this type of economic environment, but the saying ‘Pay yourself first’ has never become more valuable or meaningful," said Kamie Zaracki, CEO of BetterInvesting, a nonprofit organization dedicated to investment education. "Maintaining a prudent, disciplined and non-emotional approach to investing will prove successful as this economy begins to right itself."
Despite their financial fears and current belt-tightening, Americans are refreshingly hopeful in the economy, themselves and the Obama administration. Half of Americans think the economy will improve by the end of 2009, and 61 percent remain confident about their own ability to plan for retirement. Forty-three percent of Americans expect a positive impact in their financial status due to President Barack Obama taking office this year. Gen X was the most confident in Obama, with 49 percent saying his administration would have a positive impact.
"Investing needs vary across generations, and the economy is challenging investors this year, but all investors want to make the best decisions for their situation," Moloney said. "Scottrade has always been dedicated to providing education and trading tools that help people invest in their futures."
