A new retirement savings study is sharing some interesting insights regarding how different generations approach and handle money that will be used for their later years. According to Allianz Life, who recently published the New Generations Ahead Study, it appears baby boomers are embracing a savings mentality, and even Millennials are paving their own way to retirement saving success (though they are using different methods than other generations). And while that is good news for those two segments of society, it seems the only generation at the moment that is lagging behind in retirement preparedness is Gen X.
In addition to the information above regarding how different age groups approach the retirement savings process, the study shared crucial information in other areas as well. For instance, it found that most Americans do have some worries about retirement and how their lifestyle and care will be funded. The study highlighted that almost two-thirds of those interviewed – 63 % - fear running out of retirement funds before they die.
And while running out of money is a top concern, baby boomer views have shifted over the years into a more positive outlook. At the time of the study, more than seven out of every 10 baby boomers – 72 % - stated they feel adequately prepared in terms of finances for their retirement. This is a notable increase, as this figure only hovered around 57 % back in 2010. Also showing marked improvement in terms of baby boomers is the feeling of having enough security in their future that they feel they can stop working. Today, only 32 % state they are unsure about whether or not it is safe to stop working, whereas over 50 % of boomers interviewed back in 2010 said they do not feel secure enough to discontinue employment.
This new information on retirement preparedness comes from the study interviewing 3,000 men and women in America, 1,000 from each generation: baby boomers ages 52-70, Gen Xers ages 37-51, and Millennials ages 20-36.
Vice President of Consumer Insights for the Allianz Life retirement study shared that, “Whether taking lessons from the past or forging a new path, the key for each generation is to recognize that a solid retirement plan doesn’t happen by chance, but rather with a clear process and defined actions.”
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Also seen in the latest study is a different attitude among many baby boomers than was seen in previous years. For instance, some boomers previously studied held onto the free-spending, “me” generation habits, whereas today it seems many are now leaning towards the financial saving actions and habits of their parents, whose behaviors towards money were influenced by the Depression. Figures from this new study show 64 % of baby boomers now categorizing themselves as “savers” vs. “spenders”.
Another interesting area to the Allianz Life study revolved around Millennials and how their retirement preparedness and savings mentality is surpassing the Gen X generation. Currently, Millennials seem to be in a much better position for having adequate savings at the time of retirement based on current numbers. Right now, the median amount for retirement savings for Gen X is only $35,000; this happens to also be the same figure for Millennials who are not nearly as close to retirement as the previous generation.
And while Millennials seem to be in line for a secure retirement based on current savings figures, they do display some distressing behaviors such as spending. Right now, 50 % of Millennials state that they spend more of their paycheck on going out and socializing than they do on rent/mortgage. The question remains, how will this generation’s spend-freely attitude affect their retirement savings in the coming years…
Creating a retirement savings plan will be a different process for everyone, and no matter how late in the game you are starting, you can still put aside a savings amount that will be beneficial in your golden years. If you are just getting starting on your retirement financial plan, or need help reviewing your current retirement savings and how you can improve upon it, reach out to skill financial planner Matt Logan at www.MattLoganInc.com
Matt Logan Inc. is an independent firm with Securities offered through Summit Brokerage Services, Inc., Member FINRA, SIPC. Advisory services offered through Summit Financial Group Inc., a Registered Investment Advisor. Summit Brokerage Services, Inc., its affiliates and Matt Logan Inc. do not give tax or legal advice. You should consult an experienced professional regarding the tax consequences of a specific transaction. These are the views of Matt Logan Inc, and not necessarily those of Summit Brokerage Services, Inc. and any of its affiliates and should not be construed as investment advice.