Yankee 401(k) advisors rejoice. The amount of help your plan sponsor clients and participants need with 401(k) savings all depends on where your business resides. Personal Capital released new data that reveals the state of U.S. retirement readiness by region, and the Northeast came in strong. In fact, all of the East Coast reigned supreme:
- Delaware is the most prepared state for retirement with the highest average amount of savings to date at $286,277.
- Connecticut is the second most prepared ($279,367 is the average amount saved).
- New Jersey is the third most prepared ($272,918 is the average amount saved).
- California falls behind with only $227,290 saved, landing in the #20 spot overall.
- East Coasters are the most interested in paying for their education goals: New Jersey, Massachusetts and New York rank as the top 3 states planning to save for education expenses.
- Average expected savings for a 4-year education by New Jersey, Massachusetts and New York are $199,039, compared to California at #5 with an average of $174,684.
While the location in which someone lives may predict their savings, the data shows that (surprise) creating a comprehensive plan substantially improves the odds that they will be set for retirement.
Millennial Money Matters
Millennials have had fewer years to save compared to other generations, so it is no surprise that they would have the least amount saved to date. But, the data unveils a surprisingly large generational gap in retirement readiness:
- Baby Boomers have an average of $554,805 saved for retirement. This is 125% more than Gen X ($246,924) and over 700% more than Millennials ($68,971).
- Millennials plan to spend less on many goals than other generations, such as home purchases ($142,274), and far less than Gen Xers ($686,739 planned for the same goal).
- Millennials anticipate spending an average of $325,357 on vacations by the time they retire, while Gen X plans to spend $473,192.
- The average Millennial expecting an inheritance anticipates an average of $1.06 million — twice as much income as from their paychecks.
- Millennials expect to work for only 15 years and save $445,687 for retirement.
Financial Priorities Beyond Retirement: Education And Giving Back
Beyond overall retirement savings, education and charity are top of mind as future goals:
- Education is the #1 goal for the majority of Personal Capital users — 60% plan to save $149,956 on average for the 4-year expense.
- Users plan to spend an average of $345,772 on charitable gifts over the next 35 years, making it one of the top 3 financial goals.
- This is higher than users’ anticipated costs for healthcare ($303,440), home purchases ($295,631) and weddings ($34,677).
- Millennials are ranked as the most generous generation, with a goal to contribute $382,485 on average to charity.