An uncertain future? How boomers, millennials, Gen Z, Gen X are each preparing for retirement

Gen Z (born 1997 to 2012)

Retirement savings: $31,000 

"Generation Z workers are embarking on their careers in tumultuous times … while many are also being called upon to support their elders," said Collinson. "Generation Z workers are working all the angles by taking on side hustles in the gig economy, and they are stretched to their limits."

Gen Z workers' current financial priorities include paying off debt (55%), saving for a major life event (46%), just getting by to cover basic living expenses (41%), building emergency savings (40%), and saving for retirement (32%). Despite these competing priorities, three in four Generation Z workers (76%) are saving for retirement through 401(k) or similar plans and/or outside the workplace – and they started saving at age 20 (median). Those participating in a 401(k) or similar plan currently contribute 15% (median) of their annual pay.
"Generation Z is already saving for retirement and they have many decades to work, save, and grow their savings," said Collinson.

Millennials (born 1981 to 1996)

Retirement savings: $65,000 

"Millennials are currently in their late 20s to mid-40s. They are feeling the crunch in their 'sandwich years' of juggling employment, raising children, and caring for aging parents. With such pressing priorities, it could be tempting to procrastinate with their long-term retirement preparations," said Collinson.

Millennial workers' current financial priorities include paying off debt (62%), saving for retirement (55%), building emergency savings (46%), supporting children (43%), and saving for a major life event (40%).

Eighty-five percent of millennial workers are saving for retirement in a 401(k) or similar plan and/or outside the workplace. They began saving at age 26. Those participating in a 401(k) or similar plan currently contribute 10% of their annual pay.

"Millennials are still two to three decades away from retirement – which gives them some time to save and grow their savings. Right now, they should start creating financial plans that reflect their goals and aspirations as well as their priorities and realities," said Collinson.

Gen X (born 1965 to 1980)

Retirement savings: $107,000 

"Generation X begins turning 60 this year and they are behind on their savings. Retirement is a light on the horizon, growing closer and brighter. Many plan to work beyond the traditional retirement age to earn income and bridge savings gaps, but their success will depend on how well they maintain their health and employability," said Collinson.

Only 18% of Gen X workers are very confident they will be able to fully retire with a comfortable lifestyle, and just 23% "strongly agree" that they are building a large enough retirement nest egg. Thirty-nine percent expect to retire at age 70 or older or do not plan to retire, and 56% plan to continue working in retirement.

Eighty-two percent of Gen X workers are saving for retirement in a 401(k) or similar plan and/or outside the workplace. They began saving at age 30. Those participating in a 401(k) or similar plan currently contribute 10% of their annual pay.

Half of Gen X workers (50%) expect their primary source of retirement income to come from self-funded savings, including 401(k)s, 403(b)s, and IRAs (39%) or other savings and investments (11%). Twenty-eight percent expect to primarily rely on Social Security. Seventy-seven percent are concerned that Social Security will not be there for them when they are ready to retire.

Only 25% of Gen X workers have a written financial strategy for retirement. "For Generation X, the road to a financially secure retirement has been circuitous. Back in the 1980s and 1990s, when they entered the workforce, the retirement landscape was quietly shifting away from traditional pensions toward 401(k) plans …Among Generation Xers who were fortunate enough to be offered a 401(k) plan in the early years of their career, many were unaware of the importance of saving," said Collinson.

Baby boomers (born 1946 to 1964)

Retirement savings: $270,000 

"Baby boomers are now in their early 60s to late 70s …," said Collinson. "Among those still in the workforce, baby boomers are stretching the boundaries of working later in life. However, they are vulnerable to health and employment issues, so they need contingency plans in case retirement comes unexpectedly."

Almost six in 10 baby boomer workers (57%) expect to retire at age 70 or older or do not plan to retire. Their greatest retirement fears are declining health that requires long-term care (49%), outliving their savings and investments (44%), and that Social Security will be reduced or cease to exist in the future (44%).

Almost four in 10 baby boomer workers (39%) expect Social Security to be their primary source of retirement income, while 30% expect to rely on income from 401(k)s, 403(b)s, and IRAs, and 11% from other savings and investments. Seven percent expect their primary source of retirement income to come from continued work and 7% expect it to come from a company-funded pension plan.

Eighty-five percent of baby boomer workers are saving for retirement in a 401(k) or similar plan and/or outside the workplace. They began saving at age 35 (median). Those participating in a 401(k) or similar plan currently contribute 10% (median) of their annual pay.
"Baby boomers have not enjoyed the same amount of time to save in 401(k)s compared with younger generations. They were already mid-career when 401(k) plans were introduced, so they got a later start on their retirement savings journey. Now, many are making up for lost time," said Collinson.

Reaching retirement goals

Almost seven in 10 workers (68%) across generations feel they could work until retirement and still not save enough to meet their needs. While more than half of workers (58%) would prefer to rely on outside experts to monitor and manage their retirement savings, only 35% currently use a professional financial advisor. Just one in five workers (22%) have "a lot" of working knowledge about personal finance. Even if workers were to fully maximize these opportunities, they still need support from policymakers to achieve a secure retirement.

"The strength of the U.S. retirement system relies on a robust economy, labor force, and employment market – an environment that is conducive for workers to earn income and save for the future. With today's accelerating pace of change, policymakers can help ensure that workers don't get left behind," said Collinson. "Policymakers can also make it even easier and more affordable for employers to offer retirement benefits to their employees. At the same time, Social Security and Medicare have funding issues that are begging to be solved. Workers are paying into these programs with expectations of receiving the benefits they have been promised."

Related: Financial uncertainty hitting Gen Z and millennials harder than others, study finds

Many workers (75%) have a financial strategy for retirement, but only 29% have a written plan and 46% have an unwritten plan. One in three millennials (34%) have a written plan compared with 29% of Gen Z, 27% of boomers, and 25% Gen X. Of concern, among generations closest to retirement, 29% of Gen X and 24% of boomers do not have any financial strategy for retirement.

More than two in three workers (68%) would like more information and advice from their employers on how to reach their retirement goals. Gen Z, millennials, and Gen X are more likely than boomers to want more information and advice about reaching retirement goals (73%, 74%, 66%, 47%, respectively).