Millennials and Gen X worried retirement years won't be so golden

That’s a key finding from a new report released Tuesday by Bank of America and Merrill Edge.

The survey of more than 1,000 Americans found that among Gen Xers who were still working, 74% were most likely to believe they’ll be financially stressed in retirement based on how they are currently putting money away. Among Millennials, 67% had the same fear.

That’s in contrast to 59% of current retirees who say they aren’t worried about money because of how they saved.

Some of that disparity can be attributed to the younger generations simply fearing the unknown.

“The retirees now know what their costs are in retirement,” says Aron Levine, head of Merrill Edge at Bank of America. “They know what they’re spending in the near term, their health care costs, so it’s a little easier to understand and look out over the next few years vs. Gen X and Millennials who are looking 20 to 25 years out in the future. The unknown, and everything they see and read, suggests a very stressful situation.”

But a big source of the stress is that the younger generations are juggling many situations, from aging parents to student loans.

It’s “that combination of having to deal with a lot of priorities and really focusing on paying down debt and the uncertainties around health care and other costs,” Levine says.

Health care costs are a top worry, regardless of age, with 65% of all those surveyed saying that unexpected medical costs would strain their finances in retirement. A lack of Social Security benefits came in second, with 38% of respondents saying that would stress their budgets.

“What people do see is that (health care costs) keep going up, and the question ties into longevity,” Levine says. “If you’re a Gen Xer or Millennial you say, ‘I may live a lot longer than previous generations. … How do I save if I’m going to live into my 90s?’ ”

Apparently, a good number of Millennials believe the answer, in part, is getting money from family and friends. The report found 43% of that age group say they are counting on some financial help from loved ones if they need it in retirement. That may be tied into a belief that they’ll get an inheritance to help tide them over, Levine says, “and with Millennials in particular, sharing is becoming a big part of how they live. Zipcar and Uber and social media … so thematically, for them it’s reasonable to think they’ll get help from people along the way.”

A better path however, would be to have a savings plan, and many Gen Xers (defined by the study as ages 35 to 49) and Millennials (ages 18-34) are not seeking help from a professional to create one.

The report found 24% of non-retirees are working on retirement goals with an adviser vs. 38% of retirees who did the same before quitting work.

“A lot of Gen Xers and Millennials are not seeking outside help to the degree previous generations did,” Levine say, noting today’s retired seniors “had a plan. They stuck with it, they got help along the way, and now that plan has worked for them for 30 or 40 years.”

Eric Roberge, a certified financial planner whose business caters to Millennials, says that it’s not too late for those who have been straggling with their savings to get on track.

“For Millennials, this is the time to take action around their finances,” he says. “This involves taking a hard look at their income and expenses and their assets and debt. These items make up their financial foundations.”

Next, he says, “identify an amount of money that they can contribute to their retirement accounts. Saving early and often is a good recipe for creating an adequate amount of money that will support them in the future. Early on in our working years is the best time to start. And, at that time, the amount of money they are saving is much more important than how this money is invested.”

All the worry about the future might be leading to a silver lining, Levine says. The report found a significant bump in the percentage of people who say they’re making their future finances a priority, jumping from 48% to 61% in one year.

“You may see that come through in signing up for the 401(k) at work and taking advantage of opportunities when they’re given them to save more,” Levine says.

“Emotions and stress are starting to drive better actions, whether it’s thinking about how to save more, or taking specific actions to save more.”