A Generational Approach to Retirement Planning

Millennials
Having grown up in the digital age, millennial workers (born between 1979-2000) are taking a digital, do-it-yourself approach to their retirement savings. While these workers are still decades away from retirement, millennials are getting an early and strong start when it comes to their retirement savings.

As pension plans offered by employers become a thing of the past, millennials will be the first generation of workers to bear the responsibility of saving for retirement largely unassisted and on their own. In fact, 53% of millennial workers expect their primary source of retirement income to be self-funded savings via 401(k)s, 403(b)s, IRAs, and other savings accounts¹. Fortunately, they appear to be rising to the challenge.

According to a 2019 retirement study, on average, millennials began saving for retirement at the young age of 25² – a full decade earlier than baby boomers. What’s more, a survey of 2,000 American adults found that millennials’ retirement accounts carry an average balance of $63,300³. The takeaway here – today’s workforce knows that it pays to start saving early, literally!

Generation X
Known as the “sandwich generation”, Gen X workers fall between two much larger cohorts – baby boomers and millennials. Born between 1965 and 1978, this generation entered the workforce in the late 1980s as defined benefit plans were beginning to disappear and 401(k) plans were coming to light. As the first generation to have access to 401(k) plans for most of their working years, Gen X workers have relatively high participation rates in their company plans – but they could be saving more.

In balancing the needs of their parents and children, Gen X workers have been known to make trade-offs, especially when it comes to retirement. In fact, only 59% of Gen X workers are confident they’ll have enough money to maintain their lifestyle in retirement, as compared to 72% of all workers⁴. And with an average of 65% of Gen Xers monthly income going toward household expenses⁵, it’s easy to see why.

The good news? Like millennials, Gen X workers got a relatively early start in planning for retirement, with the median age being 30¹. According to the previously mentioned survey, Gen X workers have an average of $98,900 saved for retirement³. And with some wise investing and a renewed focus on retirement planning, there is still time to grow this nest egg.

Baby Boomers
As a generation known as non-conformists, Baby Boomers have rewritten the rules of society at every stage – and that includes retirement. Born between 1946 and 1964, the oldest members of this group have already reached the full retirement age for Social Security benefits, while the youngest members have approximately another decade left in their careers. Different from previous generations, Baby Boomers are increasingly reaching retirement age in good health and with a positive outlook – not to mention a considerable number of active years ahead of them.

The Baby Boomer generation spent most of their years in the workforce before the conceptualization of 401(k)s and employer sponsored retirement plans. As such, they rely more heavily on Social Security and pensions that other generations – with some doubt as to whether that is enough to fund their golden years. In fact, the senior workforce ages 65+ is rapidly rising and will continue to do so in the coming years. What’s more, 7 in 10 Baby Boomers report that they either expect to or are already working beyond the age of 65 – or do not plan to retire at all¹. 

Some Baby Boomers opt to continue working or get a job in retirement years to supplement Social Security income and postpone dipping into their retirement assets. Others find that working part time offers the opportunity to stay active and intellectually engaged as they settle into their post-career lifestyle. With a need to have more income and fewer expenses, opting to work in retirement years is proving to be a trend popular among today’s retirees regardless. Especially when you factor in today’s inflation…