Millennial and Gen Z retirements might actually be OK while boomers and Gen X could struggle. It's due to how savings have changed over time.

• Morningstar found a higher share of boomers and Gen X are at risk of retirement shortfalls.
• This is largely due to the different types of retirement accounts that didn't exist for older adults.
• Pensions have been on the decline while savings accounts like 401(k)s have been boosted in recent decades.

Retirement isn't looking too hot for boomers and Gen Xers — but younger generations just might be OK.

Financial services company Morningstar released its July 2024 report on the state of retirement in the US , which, among other results, examined the likelihood that different generations will have sufficient savings as they enter retirement.

It found that millennials and Gen Zers are at lower risk of having a savings shortfall in retirement than Gen X and boomers, due in large part to major changes over the last several decades in how retirement benefits are structured. Assuming no changes to Social Security benefits, 37% of Gen Z and 44% of millennials could experience retirement shortfalls, coming in below 47% of Gen X and 52% of boomers.

These findings are based on Morningstar's model of US retirement outcomes, which simulates whether Americans will have sufficient income in retirement based on a representative sample of US households using 2022 Survey of Consumer Finances data.

Older Americans are increasingly struggling to stay financially afloat as they enter retirement. The issue is especially prevalent for the younger cohorts of the baby boomers — over 30 million of them born between 1959 and 1964 are starting to turn 65 this year, and a recent report from the Alliance for Lifetime Income's Retirement Income Institute found that 52.5% of them have $250,000 or less in assets. Additionally, many of them did not have the same types of retirement accounts that now exist for younger generations, meaning they'll have to drain their savings and rely on Social Security to get by in retirement.

One 68-year-old previously told BI that she cannot afford to retire and is living off her Social Security and salary. "I used to say this all the time as a joke, I'm going to have to work until the day I die because I can't possibly ever afford to retire," she said.

The changing retirement savings landscape

Spencer Look, associate director of retirement studies at Morningstar Retirement and one of the report's authors, said Morningstar defined retirement shortfalls as "cases where the household was not able to fund typical expenses and long term supports and services costs throughout retirement."

Look told Business Insider that millennials and Gen Z benefit from a range of products that didn't exist for older generations previously, including auto-enrollment in savings accounts and diffenrent types of retirement funds.

The report said, "Baby boomers and Gen Xers may have lower levels of retirement savings because they were impacted by the transition from" a defined-benefit-dominant system, which includes pensions, to one that's dominated by defined contribution accounts, such as 401(k) plans.

Pensions — or payouts employers offer to former employees — have dwindled in the US over recent years. The more popular form of savings is 401(k)s, in which workers and their employers contribute to the funds while employed to bolster their savings once they retire.

But those who spent large parts of their careers between those two systems may not gain the benefits of either. "Having that uncertainty and that transition, it definitely shows up because the results in our model are much more driven by current levels of savings because these folks have less time left in their working years," Look said about boomers and Gen X.

"If folks just really don't think their finances will be enough to sustain the lifestyle they want in retirement, I know it's not something people want to hear, but working a little bit longer or working part time, that can go a long way," Look said.

Look added that while he knows delaying retirement isn't a possible situation for all, he pointed out it could help prevent those shortfalls. According to the report, only around 28% of US households would face retirement shortfalls if they retire at 70. Meanwhile, this figure was 54% for age 62, 45% at Morningstar's baseline retirement age of 65, and 38% for retiring at 67.

It "can make a really big difference," Look said about delaying retirement age.

"You not only have more time accumulating your assets and hopefully growing with the capital markets," Look said. "You can delay claiming Social Security and get a bigger benefit and inflation-adjusted benefit."

How are you making or planning to make ends meet in retirement? Reach out to these reporters at asheffey@businessinsider.com and mhoff@businessinsider.com .