There’s been a lot of hand-wringing over the retirement prospects of young Americans, and the huge millennial generation in particular. Is all that worry misplaced? POLITICO asked Alicia Munnell of Boston College, a veteran of the Treasury Department, the Council of Economic Advisers and the Federal Reserve Bank of Boston, and perhaps the leading researcher of American retirement, to crunch the numbers, give us a definitive answer to the scope of the problem—and offer a look forward.

Concern about the financial health of America’s younger generations is growing—especially millennials, a demographic boom that came of age in an environment of unstable work and record levels of student debt. Experts worry that millennials are falling so far behind previous generations that their retirement may be at risk.

My research suggests that those concerns are real, and millennials really are building wealth more slowly than the other working generations. But they are not insurmountable—as long as millennials are willing and able to work longer than their parents and grandparents did.

A comparison of millennials (adults currently ages 25 to 35) with earlier cohorts (Gen-Xers and late baby boomers) when they were the same age shows that even though a higher percentage of both millennial men and women have college degrees, they are behind in almost every economic dimension.

One reason is that millennials entered the labor market during tough times. Most turned 21 between 2002 and 2012, which meant that they were graduating from college during a period that included both the bursting of the dot.com bubble and the Great Recession. This experience appears to have been particularly hard on millennial men, who have labor-force participation rates below earlier cohorts.

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In addition, both men and women have had more difficulty finding quality jobs—career-track positions with good compensation. As a result, they are not only behind Gen Xers and late Baby Boomers on their earnings trajectory, they’re also less likely than previ­ous cohorts to receive important employer-sponsored benefits such as retirement savings plans and health insurance.

In terms of preparing for retirement, millennials have three strikes against them. First, because of limited access to retirement plans at work, millennials will struggle to build retirement savings, since experience shows that people have a great deal of trouble saving on their own. Second, they are less likely to have bought a home, and home equity is a valuable retirement asset. And third, they are more likely to be burdened by student loans, and young workers with student loans have less to stash in retirement plans and are more likely to end up at risk in retirement.

Download a copy of the report here.

An easy way to gauge retirement preparedness is to measure the ratio of wealth to income—in other words, how much millennials have been able to save or invest in assets like 401(k) plans or home equity compared to their incomes. It turns out that the wealth-to-income ratio for millennials is not only below that for Gen Xers and late Baby Boomers now, it is also projected to remain lower through their lifespans.

Millennials’ lack of wealth in their 30s relative to earlier cohorts should be a source of great concern, given that they will live longer than previous cohorts and will face higher health care costs. They, like Gen Xers, will also have to wait longer than previous generations—to age 67—before they can collect their “full” Social Security benefit. Moreover, Social Security faces a long-term financing shortfall, so millennials could face further benefit reductions.

However, the good news for millennials is that retirement is still a long way off. A lot will depend on their future savings patterns, financial market returns and, particularly, how long they work.

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Working longer is a powerful lever. Social Security benefits claimed at 70 instead of at 62 are at least 76 percent higher, and the additional years of work allow 401(k) assets to increase and reduce the period of time that the assets need to cover (see Figure 2). In fact, my research shows that the vast majority of millennials will be fine if they work to age 70. And although that might sound old, it’s historically normal in another sense: Retiring at 70 leaves the ratio of retirement to working years the same as when Social Security was originally introduced.

Alicia H. Munnell is director of the Center for Retirement Research at Boston College and a professor of management sciences at Boston College’s Carroll School of Management at Boston College.

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