Did you know that there was such a thing as Generation Beta? [i] As best as I can tell, there is still no consensus about Generation Alpha.[ii] Amazing that retirement advisors can predict doom and gloom for someone born in January 2025. I guess habits formed predicting “retirement doom” for Baby Boomers, Generation X, Millennials, and Generation Z are hard to break.[iii]
A recent Investopedia article[iv] suggests Gen Beta “… would, on average, need $1.88 million in retirement savings …” because that generation would encounter obstacles for saving such as “… the rising cost of living, an unstable economy, high medical expenses, and AI displacing jobs. …” The article recounted survey results suggesting that a majority of prospective parents of Gen Beta children doubt their children will be able to retire.
At the same time, the article does confirm that parents already know the easy solution: “start saving for their child’s retirement from birth.”
No one can predict the future. Assuming today’s ever-increasing life expectancy continues, for individuals born in 1960 or later, including all members of Gen Beta, Generation Alpha, and Gen Z who were born in the 21st Century, the Required Beginning Date of 75 seems to be a reasonable “Normal” retirement age.
The Easy Solution
Nothing in life is certain. However, Americans who have children are almost always optimistic about the future, and generally optimistic about America’s future as well.
It was Ben Franklin, the First American, who taught us how YOU can ensure your children or grandchildren, or great grandchildren can become financially resilient including achieving a financially successful retirement.[v]
Retirement preparation is generally not a top financial priority today for anyone born in the 21st Century—including almost everyone who is part of Gen Beta, Generation Alpha, and Gen Z.
So, if YOU want to ensure long term financial wellness, financial resilience, and/or retirement preparation for your descendants, YOU should leverage your accumulated savings as part of the “Great Wealth Transfer.”
But, unlike Ben Franklin, do not wait until you are dead.
Act today!
While there are many vehicles, such as the Uniform Gifts to Minor’s Act, a middle-class solution was added by Congress in recent legislation[vi], allowing you to leverage a contribution to the 529 program into a long term, retirement savings solution.
Modest contributions at birth or soon thereafter, coupled with fiscal discipline to allow those monies to compound tax deferred, will, under current tax code, ensure the members of Generation Beta can attain “middle class millionaire” status and enjoy a financially successful retirement.
For those in Generation Alpha, a slightly higher contribution today (designed to accumulate to $35,000 after 15 years) will also generate a favorable outcome.
And, while the same contribution for a member of Generation Z will not be adequate, nothing stops the parent, grandparent, or great grandparent from making up for lost time by making additional gifts to fund the descendant’s Roth IRA.
Keep in mind that very few Americans age 65+ have $1+MM in assets in retirement savings accounts.[vii]
According to the Federal Reserve’s Survey of Consumer Finances, only 10% of retirees have $1 million or more in savings. In 2019, the average retirement savings for those ages 65 to 74 was $426,000, $357,000 for those aged 75 and older. The median is much less—$164,000 for those ages 65 to 74, $83,000 for those age 75+—where members of both age groups are likely in the spend-down phase.
Later in the 21st Century, or at the beginning of the 22nd Century, what percentage of Americans age 75+ will have a million in retirement savings? Will it double to 20% or triple to 30%, or more?
And, what will $1.88 million buy in the 22nd Century?
I do not know, but I know which group I want my children, grandchildren, and great grandchildren to be in.
How about you?
SEE ALSO:
• Prudential Offers ‘Baby Bonus’ to Kick Off Retirement Savings
• Let Ben Franklin Create ‘Middle Class Millionaires,’ Eradicate Poverty in America
I always appreciate your comments, concerns, criticisms, or questions. Connect with me on Linked-in or contact me at: jacktowarnicky@gmail.com
Disclaimer No. 1: My comments are my own based on my past experiences in plan sponsor and consulting roles and do not necessarily reflect those of any employer or association I have been employed by or affiliated with, past, present, or future.
Disclaimer No. 2: Information was provided by individuals with knowledge and experience in the industry and not as legal or tax advice. The issues presented here may have tax and legal implications, and you should discuss this matter with tax and legal counsel prior to choosing a course of action. This article is intended to be informational only. It is not and you/others should not use it as a substitute for legal, accounting, actuarial, tax or other professional advice. Any advice contained in this article was not intended or written to be used and cannot be used by anyone for the purpose of avoiding any Internal Revenue Code penalties that may be imposed on such person [or to promote, market or recommend any transaction or subject addressed herein. You (others) should seek advice based on your (their) particular circumstances from an independent tax advisor.
[i] Generation Beta (Gen Beta), Wikipedia, Accessed 1/6/25 at: https://en.wikipedia.org/wiki/Generation_Beta
[ii] Generation Alpha, Wikipedia. “There is no consensus yet on the birth years of Generation Alpha. … 2010–2024, … 2010–2025 … 2011–2025 … 2011–2021 … 2013–2021.” Accessed 1/6/25 at: https://en.wikipedia.org/wiki/Generation_Alpha
[iii] Generation Z, Wikipedia. “Researchers and popular media have used the mid-to-late 1990s as starting birth years and the early 2010s as ending birth years to define Generation Z. … 1997–2012 … 1997 – ? … 1995- 2012 … 1996 – 2010. Accessed 1/6/25 at: https://en.wikipedia.org/wiki/Generation_Z
[iv]T. Paul, Most of Gen Beta Isn’t Even Born Yet, But They’re Inheriting A Bleak Retirement Outlook, 1/2/25, Accessed 1/6/25 at: https://www.investopedia.com/generation-beta-just-being-born-parents-bleak-retirement-outlook-8768168. See also: NAPA, Here Comes Generation ‘Beta,’ and a Retirement Bonus to Boot, 1/6/25, Accessed 1/7/25 at: https://www.napa-net.org/news/2025/1/here-comes-generation-beta-and-a-retirement-bonus-to-boot/ See also: Prudential, Generation Beta Redefining Life, Longevity, and Retirement, January 2025, Accessed 1/7/25 at: https://prudential.scene7.com/is/content/prudential/1084035_BetaBabies_Whitepaper
[v] M. Meyer, Ben Franklin’s Last Bet: The Favorite Founder’s Divisive Death, Ensuring Afterlife, AND Blueprint for American Prosperity, Mariner Books, 2022
[vi] SECURE 2.0, Section 126, Division T, Consolidated Appropriations Act of 2023, Pub. L. 117-328
[vii] R. Lake, How Many Americans Retire With $1 Million? 1/16/24, Accessed 1/6/25 at: https://finance.yahoo.com/news/many-americans-retire-million-dollars-140019814.html?fr=sycsrp_catchall
Jack Towarnicky provides independent benefits consulting and serves as a member of aequum, LLC and of counsel for Koehler Fitzgerald, LLC.
