Study: Workers and Retirees See a Crumbling Social Contract for Retirement

Almost half of today’s workers and retirees believe that future generations of retirees will be worse off than those currently in retirement (49 percent globally, 46 percent U.S.), according to a study released by the Transamerica Center for Retirement Studies (TCRS). In "The New Social Contract: a blueprint for retirement in the 21st century,"
workers and retirees in 15 countries spanning the Americas, Europe, Asia, and Australia were asked about global trends that are impacting their plans for retirement. The most frequently cited trends were:

• Reductions in government benefits (38% global, 26% U.S.)
• Increased life expectancy (27% global, 25% U.S.)
• Volatility in financial markets follows (24% global, 22% U.S.)
• Changes in labor markets (21% global, 14% U.S.)
• Prolonged low interest rate environment (20% global, 14% U.S.)

The survey report was a collaboration among TCRS, the Aegon Center for Longevity and Retirement (ACLR), and the Instituto de Longevidade Mongeral Aegon. According to Catherine Collinson, CEO and president of Transamerica Institute and TCRS: "People are living longer than any time in history and birthrates are declining. This phenomenon known as ‘population aging’ is financially straining government-sponsored retirement benefits. Simultaneously, employers have been replacing traditional defined benefit pension plans with employee-funded defined contribution retirement plans." Thus, "individuals are expected to take on increasing risk and responsibility in self-funding a greater portion of their retirement income."

Source: Transamerica Center for Retirement Studies Press Release (May 29, 2018)