Every generation has its differences. One such disparity is the view on retirement and the amount of focus put into retirement planning. Below is a brief look into how each generation fares on the topic and what has been brought to light through financial research.
Although it can be unfair to lump people into one frame of mind by age, there is something to generational thinking. In fact, research shows age groups are frequently found to have similar opinions on important matters, such as political standpoints. These concurring sentiments are due to the generations being similarly affected and shaped by the influential events and economic troubles of their time.
For instance, Baby Boomers have lived through many ups and downs in the market. From the stock market crash of 1987 to the 2008 Recession, they have experienced many events with the potential to upset their finances and retirement savings. What’s more, much of this generation predates the employer sponsored retirement plans and 401(k)s we’ve become accustomed to today and, as such, rely more heavily on pensions and Social Security in old age. Data shows factors such as these have contributed to the fact that 70% of Baby Boomers either do not plan on retiring or expect to or are already working beyond the age of 65.
The generation after them, Gen X, also have had to contend with those same events as well as the Tech Revolution. Of course, it’s not all bad news for the “latchkey generation,” as they report relatively high participation rates in company retirement plans and, on average, started saving around 30 years old, which is comparatively earlier than older generations. Surveys show nearly 60% of Gen X workers are confident they’ll have enough wealth in retirement to maintain their lifestyles. Fortunately for the others, there’s still time for Gen X workers to invest wisely and grow a substantial nest egg.
Speaking of investing, research shows millennials are taking a digital approach to retirement, with a focus on self-led market investments such as cryptocurrency. Although they make up some of the youngest in the workforce, Gen Y have been strongly considering the importance of early retirement planning and, consequently, have an average balance of $63,300 saved already. Millennials have also had many periods of economic uncertainty in their lives, including the most recent global market crisis. As the economic fallout from the Covid-19 pandemic settles, we’ll see just how lasting its impact on millennial savings becomes.
Despite the similarities among age groups, there is no one-size-fits-all solution for retirement planning. That being said, if you want to be more proactive about saving, there are services available that can help. Whether you’re just getting started or retirement is right around the corner, it pays to prioritize your comfort in later life today.
For further information on how financial retirement planning differs by generation, please see the accompanying resource from Longbridge Financial, a reverse mortgage company.