Millennials and Gen Z are feeling more confident in their ability to save for retirement than Gen X and Baby Boomers, who are more likely to feel like they’re falling behind, according to a new study.
Goldman Sachs Asset Management’s annual retirement report, “The Generational Divide,” found that 69% of Millennials and 68% of Gen Z report they feel their retirement savings are on track or ahead of schedule. Yet, just under half of Gen X and working Baby Boomers (45%) say their savings are behind schedule.
“Studying retirement savings across generations brings into focus valuable insight into the changing macro-dynamics Americans face,” said Greg Wilson, head of retirement at Goldman Sachs Asset Management, in a statement. “With the journey growing increasingly personal, our industry must innovate solutions that better meet savers where they are. Enhanced education and advice that can help them create personalized plans should be integral to everyone’s retirement plan design.”
The report finds that “the financial vortex”—sudden job losses, taking time off to care for children or adults, unexpected expenses—has a big impact on the ability to save for retirement, impacting later generations the most.
That’s potentially why Gen Z—those born between 1997 and 2012—is the most confident about its retirement prospects. Almost 50% of Gen Zers say they expect to retire before age 60, and 68% believe their savings are on track or ahead of schedule.
While many are off to a good start—with median retirement savings of around $29,000—Gen Z’s confidence might not reflect reality. Among those surveyed, 3 in 4 said they’re planning to retire with less than 70% of their working income, and 61% expect to fund less than half of their retirement from personal savings, versus Social Security or pensions. Yet fewer employees have access to pensions these days, and Social Security benefits are set to decline 24% by 2033, barring policy changes.
Education could be beneficial, and Gen Z respondents noted they might need some help with planning. When asked about the top retirement-related service they desired from their employers, 36% said professional financial planning and advice services, and 28% said retirement strategy education. They also expressed interest in emergency savings assistance (37%).
Among the generations, Millennials were the most likely to be juggling competing priorities and navigating hurdles when it came to retirement savings. While 69% report their retirement savings are on track or ahead of schedule, many are struggling with credit card debt (73%), paying down loans (75%), caring for family members (76%), and too many monthly expenses (82%).
While most Millennials (52%) said they manage their own retirement finances, many said they could benefit from a personalized financial plan (46%), access to a professional financial advisor (37%), or a professionally managed investment portfolio (30%).
For Gen X, while almost half believe they’re behind schedule when it comes to their retirement savings, only 55% have a personalized plan in place. Many are also beginning to enter retirement sooner than planned, often for health reasons or needing to care for family members. Gen Xers were more likely than younger generations to express interest in guaranteed income options (35%) from their employers’ retirement offerings.
Baby Boomers are retiring later than prior retirees, with most aiming to stop working between ages 65 and 69. By comparison, 42% of Baby Boomers who retired more than 5 years ago retired before age 60. This may be because 44% of working Baby Boomers believe their retirement savings are behind schedule.
Working Boomers are most worried about future healthcare concerns (37%), having sufficient savings (31%), and the impact of inflation (30%). While investment income is their top choice for generating income in retirement (60%), many are considering part-time work (51%). Nearly half of working Baby Boomers (46%) are also interested in adding guaranteed retirement income to their strategy.
“The challenges brought by the financial vortex can shift and grow in difficulty as we age,” Wilson said. “To keep our retirement savings on course, we must anticipate these challenges and factor them into carefully and thoughtfully designed financial plans.”
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