Retirement planning is not a universal solution that applies to everyone, and it differs significantly across generations, with each group having a distinct viewpoint on the subject. According to research, personal experiences and economic challenges are major factors that shape an individual’s financial planning strategies and political beliefs. Let’s take a brief look at each generation’s approach to retirement planning, and what financial research tells us.
Baby Boomers have had to weather several economic storms, including the 1987 stock market crash and the 2008 recession. During their peak working years, retirement plans sponsored by employers and 401(k)s were not prevalent, so they primarily rely on pensions and Social Security in their retirement. As a result, around 70% of Baby Boomers do not intend to retire, expect to work beyond 65 years, or are already working past this age.
Generation X, like Baby Boomers, has faced similar economic events and technological advancements. However, they typically have a relatively high participation rate in employer-sponsored retirement plans and begin saving for retirement earlier than earlier generations, usually around age 30. Almost 60% of Gen X workers are confident that they will have enough savings to maintain their lifestyles throughout their retirement years.
Millennials are taking a digital approach to retirement planning, focusing on self-directed market investments such as cryptocurrency. Despite being the youngest in the workforce, they are proactive about early retirement planning, with an average retirement savings balance of $63,300. However, they have also experienced economic uncertainties, including the recent global market crisis, which may have long-term implications for their savings.
Although there are some similarities among age groups, there is no one-size-fits-all approach to retirement planning. However, various services can help individuals become more proactive about saving for retirement, whether they are just starting or nearing retirement. The key is to prioritize financial security in later years by planning and saving for retirement today. For more information on how retirement planning differs by generation, please refer to the accompanying resource below.