Worker in their 20s have a penchant for saving but would face a brighter potential in retirement if they were supported by more help from employers and government policy, according to a new multinational study.

The nonprofit Transamerica Center for Retirement Studies, in collaboration with Aegon, released "The Changing Face of Retirement: The Young, Pragmatic, and Penniless Generation," a report evaluating the state of retirement preparedness among workers in their twenties in 12 North American, European, and Asian countries. The research found that the majority (59%) of workers between the ages of 20 to 29 expect to be financially worse off in retirement than their parents’ generation.

“For many around the world, their 20s bring an exciting time with seemingly endless possibilities,” said Catherine Collinson, president of TCRS. “But, saddled with student debt and scarce job prospects, our research shows that today’s twentysomethings are finding it difficult to embark on their careers and gain their financial footing.”

Analysts said that twentysomethings around the world need to take even greater levels of personal responsiblity for their financial security and retirement outcomes than older workers. Although retirement systems vary in terms of government programs, employer benefits, and the need for individuals to supplement retirement income through personal savings, twentysomethings share common challenges.

One such shared challenge is the expectation of financially supporting aging parents. Nearly three in ten respondents believe that during their own retirement they will need to financially support their aging parents. One-third of American workers in their twenties expect to provide such support along with Chinese (47%), Polish (39%), and German and Hungarian (both 31%) young workers.

Willing to save

“A surprising number of twentysomethings are committed to or have the ambition to save for retirement,” said Collinson. The study found that future retirement shortfalls among employed twentysomethings will likely be due to a lack of opportunity to save rather than a lack of will.

Twentysomethings already recognize the high value of employer benefits, with 87% believing a workplace retirement plan with employer contributions will be an important factor when choosing their next job. This percentage was highest in among Chinese twentysomethings (93%) and lowest among the Japanese (74%), Some 84% of young Americans reported valuing such benefits.

One in four twentysomethings are “habitual” savers who always make sure they are saving for retirement. Of the countries surveyed, Americans (35%) are the most likely to be ‘habitual’ savers and Spanish (14%) are the least likely.

The need to save is widely recognized across the countries surveyed: 57% of twentysomethings believe that retirement savings are important, but not a priority for them at the moment. Fifty-five percent of Americans have not yet made saving a priority.

Wanted: More pay, benefits, simpler products

Twentysomethings were asked what would encourage them to save more for retirement. Hardly surprising, the majority (57%) said a pay raise would encourage them to save more for retirement. A more generous employer matching contribution in a workplace retirement plan can also encourage savings, with one-third of twentysomethings citing this as valuable. In the U.S., it is well known that matching contributions to a 401(k) or similar plan drive up savings rates. Thirty-nine percent of American workers in their twenties said a more generous match would encourage them to save more.

Almost one-fourth (24%) of twentysomethings said they would be encouraged to save more with simpler investment products that are easier to understand, including 36% in China, 32% in the U.S., and 10% in Japan.

Lastly, governments can help lead the way through the creation of stable, long-term financial and taxation policy. In the survey, 34% said more generous tax breaks on long-term savings and retirement plans would encourage them to save, One-third of Americans would be encouraged by greater tax breaks.

“Twentysomethings are ready and willing to take responsibility of their financial futures, but need the support of employers, retirement providers and governments to help them achieve their retirement goals,” said Collinson. “Initiatives that can make a difference include better workplace retirement benefits, financial information that is straightforward and user-friendly, and more generous tax incentives.”

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