When it comes to saving for retirement, many Americans have adopted an “abandon all hope” fatalistic perspective. With so many struggling to find jobs and just pay their bills, retirement is not always a top priority. And then there is always the argument that Social Security won’t be around for younger generations.
But despite the gloomy outlook of some, a recent TD Ameritrade study indicates that many younger people are taking strides to avoid reliving the mistakes of the past. Young people are saving more and saving earlier than their parents and grandparents.
- Nearly 60% of Gen X and 56% of Gen Y make automatic contributions to their retirement savings compared to 45% of Baby Boomers.
- Both Gen X and Y started saving for retirement in their mid-twenties compared to Baby Boomers who started at age 35.
- 56% of Generation Z (ages 13-22) have a savings account, but 82% are saving for college and only 35% are saving for retirement.
- 78% of Generation X and 73% of GenY are likely to use 401(k) / 403(b) and other employer-sponsored retirement savings vehicles than older generations
- Mature Generation and Baby Boomers use other vehicles such as money market or savings accounts and IRAs than younger cohorts.
- 35% of Gen Z respondents believe they will not be able to count on Social Security when they retire, compared to 61% of their parents..
- 39% of Gen Z respondents believe they will have an inheritance, compared to just 16% their parents who reported that they believed the same for their Gen Z children.
- Forty-three percent of Gen Z respondents believe never too early start saving too early for retirement, compared to 71 percent of their parents.
“Gen X and Y have accepted the reality of the past few years, and rather than being discouraged, they are using what they’ve witnessed to their advantage by saving earlier and regularly,” Carrie Braxdale, managing director, investor services of TD Ameritrade said in a press release. “The hope is that tomorrow’s investors, Gen Z, follow suit as they near retirement.”