Gen Y Savings Woes Echo Their Elders

BOSTON (TheStreet) -- With decades to go before they retire, one might see those age 18 to 30 as having plenty of time and opportunity to save and plan for their future.

But the drumbeat of how older generations are scrambling to secure adequate retirement savings is being sounded for young people as well by Aon Hewitt (AON) , a global human resource consulting firm.

Younger workers will have fewer future benefits from their employers and potentially the government, but an Aon Hewitt survey finds a lack of urgency in saving for retirement among those age 18 to 30.
The usual suspects of stagnant wages, job insecurity and a steady decline in pension plan and retiree medical benefits may jeopardize the age group -- termed by Aon Hewitt as being Generation Y, although other demographers give different years for inclusion in that group -- as much, if not more, than their elders, research by the firm says.

Eight in 10 Aon Hewitt-defined Generation Y workers "will not meet all of their financial needs in retirement unless they significantly improve their saving and investing behaviors," the report claims.

After factoring in inflation and postretirement medical costs, its researchers project Generation Y workers will need to save 18.7 times their final pay in retirement resources -- including Social Security, employer-provided defined benefit and defined contribution plans and employee savings -- to maintain their current standard of living in retirement. A savings gap emerges, according to Aon Hewitt's research, because the generation's employees are on track to accumulate just 12.4 times their final pay, leaving a shortfall of 6.3 times pay, a third of their total needs.

If you liked this article you might like

10 Forces Conspiring Against Your Savings

10 Worst-Off State Pension Funds

10 Ways Your 401(k) Can Fail You

A Spy Kit for the Modern James Bond

Prep Your Portfolio for Disaster With a Stress Test