Most people wait until their first job out of college to begin saving for retirement. For babies born yesterday, they have the chance to start saving now.
Prudential Financial announced on Wednesday that it is offering a “Beta Baby Bonus” in the amount of $150, in an effort to welcome the incoming Generation Beta, described as those born between Jan. 1, 2025 and Dec. 31, 2039.
Using a standard annual compounding interest rate equation of 9.75% annually, a contribution of $150 towards retirement savings has the potential to grow to $100,000 within the next seven decades, says Prudential.
The initiative comes as Prudential releases its first study on the new generation. “Generation Beta: Redefining Life, Longevity, and Retirement,” takes a look at how future savers are likely to navigate careers, families, and retirement, and how new parents today are influencing their children’s future savings. According to the study, 80% of prospective Generation Beta parents say that in an ideal world, parents would start saving for their child’s retirement from birth. Further, current and prospective parents listed their top regret as not having saved more for retirement.
“Most new parents think about updating their healthcare plans or insurance policies, but that’s only the beginning,” said Brandon Goldstein, financial planner with Prudential Financial. “Reassessing your budget to ensure you’re accounting for long-term savings goals and factoring in expected rising costs for the entire family is a critical step.”
New era of retirement
Prudential’s study also predicts how Gen Beta will navigate their future lives, in aspects including finances, work, and retirement.
Sixty-six percent of those surveyed believe that in the future, retirement will lean on fluidity as more choose to leave and come back to work due to financial constraints or longer life spans. While almost half (48%) of parents and future parents do not expect their children to retire, as they estimate needing $1.88 million to afford retirement, 67% say retirement will be divided into different stages of life. These “mini-retirements” will have people take long breaks in between careers and will encourage them to move in and out of retirement.
The research also highlights how the incoming generation may be more untraditional unlike previous age groups. Their unconventional ways could unclog an opening and allow them to potentially save more.
For example, Prudential notes that traditional family structures are expected to evolve, with higher numbers of people in this generation anticipated to care more for pets than children. Such a change would unbind this group from caregiving responsibilities and costs and free up money that could then be added to retirement savings.
Likewise, the arrival of artificial intelligence (AI) technology could upgrade how this future generation lives. Fifty-eight percent of survey respondents expect the technology will elevate the lives of Gen Beta, like having robots help with household tasks or having groceries delivered by drones. However, others note that a surge of AI technology could displace workers from jobs.
Others are concerned over the potential challenges this generation will face. Among the top concerns include the rising cost of living (38%), an unstable economy (29%), high healthcare costs (28%), and savings losing value due to inflation (26%).
“As traditional paradigms fade, Generation Beta faces a potential retirement defined by fluidity, self-care, and adaptability, writes Prudential in its research. “With retirement evolving into ‘mini-retirements’ and purpose-driven experiences, the emphasis is shifting from stepping away from work to embracing new phases of life. Yet challenges like insufficient savings and a later retirement age underscore the need for innovative planning and products.”
More information on Prudential’s research can be found here.
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Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
