4 Reasons Boomers Are Worse Off for Retirement Than Millennials

Retirement is something most people dream about. Whether you are close to retirement or decades away, you may have thought about where you would want to live and what you want to do once you leave your job.

Unfortunately, not all people are fully prepared for retirement. Some strategies estimate that people will need between 10 and 12 times their annual income at retirement age, per Citizens Financial Group . An AARP study showed that 20% of adults 50 years and older have no retirement savings and 61% believe they will not have enough to retire.

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While few people are immune to retirement financial fears, older generations seem to be in a worse position than their younger counterparts. Here are four reasons boomers are worse off for retirement than millennials.

Also see how millennials budget compared with boomers at the same age .

Money mistakes the super wealthy never make - that you might be doing now.

Less Time To Save

According to a recent Morningstar report , nearly half of Americans are projected to run out of money during retirement. Not all people, however, are struggling with savings as they age. Some generations are better prepared than others to quit their 9-to-5. Morningstar reported that 52% of baby boomers could experience retirement shortfalls, whereas just 44% of millennials could experience them.

This disparity in future financial stability may be due to a number of factors, including the simple reality that older generations have less time to save for retirement. Many boomers are approaching or have already hit retirement age. Faced with challenging economic conditions during their peak earning years, boomers, particularly younger boomers, may not have had enough time to adequately save for retirement.

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Lack of Financial Literacy

Many individuals who are part of younger generations are more financially literate than their older peers. Millennials have benefited from parents who no longer consider money a taboo subject. They have been privy to financial conversations from a young age and have tuned in to experts on radio, social media and across the internet.

Boomers, on the other hand, may not have been so lucky. Money was not only considered an impolite dinner table topic but also wasn’t something that was taught. According to a Forbes study , just 41% of baby boomers reported growing up in a family that discussed money, as opposed to 73% of millennials.

Many boomers weren’t taught how to invest and could have lost out on pensions that may have saved their parents.

No Auto-Enrollment Benefits

Millennials have also made strides in retirement because of things like auto-enrollment. They tend to be better educated and better prepared for retirement. The younger of the two generations has had more access to retirement plans and benefits from decades of contributions.

Younger boomers entered the workforce during a challenging time. Employers were shifting from traditional pensions to self-funded retirement plans. The change from defined-benefit to defined-contribution plans was difficult on employees who often lacked the understanding of how much they needed to save or were burdened by financial hardships.

Today, however, things like auto-enrollment and robo-advisors help ensure the younger generation is saving for retirement and investing for the future.

Impact of the Great Recession

Lastly, boomers were deeply affected by the Great Recession. Late boomers, generally defined as those born between 1960 and 1965, tend to be in worse shape than older members of their generation. A study by the Center for Retirement Research at Boston College found that the people in this group not only entered the workforce during the time when 401(k)s were becoming more popular in companies nationwide but also were in their peak earning years during the Great Recession.

The shift from pension plans to 401(k)s for late boomers was critical because it meant that a nest egg for retirement was no longer guaranteed. Many people failed to contribute to their 401(k) during these early years or lost significant amounts of invested money during times of economic turbulence, like the Great Recession, leaving them with less time for recovery before retirement.

While younger generations may be in a better position when it comes to retirement than their predecessors, it is still important to ensure that you have a deep understanding of what you will need when you retire. Consulting with a financial advisor or retirement planner helps ensure that you are on track for a fully funded retirement.

This article originally appeared on GOBankingRates.com : 4 Reasons Boomers Are Worse Off for Retirement Than Millennials