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NextGen Magazine


Millennials Outpacing Previous Generations in Saving for Retirement, Research Shows

S.J. Steinhardt
Published Date:
Oct 3, 2023


While the millennial generation—those born in the 1980s and 1990s—may be not have the same rate of home ownership or earnings as baby boomers or Gen X-ers, they are ahead of both cohorts when it comes to retirement savings, The Wall Street Journal reported.

Based on its recent research, Vanguard Group estimated that millennials earning median salaries will be able to replace almost 60 percent of their preretirement income with Social Security, 401(k)s and individual retirement accounts. Boomers and Gen Xers earning median salaries will only be able to replace half of their paychecks from such sources.  

This circumstance is attributable to millennials saving more and earlier due to their being enrolled automatically in retirement plans such as 401(k)s. As a result, “the retirement savings picture is getting stronger with each passing generation,” Fiona Greig, global head of investor research and policy at Vanguard Group, told the Journal. The Journal noted that although employees can opt out if they don’t want to save for retirement, few do. 

“I wasn’t thinking about retirement at all,” 34-year-old Kenneth Adams of Austin, Texas, told the Journal. He began working as an engineer at a technology company in 2012. “They sent me this letter saying they were going to auto-enroll me, and I said, ‘OK, I’ll do what it says to do.'" The 401(k) plan began to save at a rate of  3 percent of his salary, and he increased his savings rate to 12 percent in 2014 after building an emergency savings account.

“There’s not that much financial education in college, which is why automatic enrollment is helpful,” he said. “It gives you a default savings option until you educate yourself on what the 401(k) can do for you.”

A 2021 study by Boston College’s Center for Retirement Research found that millennials who are in their mid-30s are catching up to where previous generations stood at similar ages with regard to factors such as earnings and rates of home ownership, the Journal reported. But, since millennials have more student-loan debt than previous generations, they are still behind in overall wealth accumulation.