There aren’t too many differences between Millennials, Baby Boomers and Generation Xers when it comes to thinking about retirement preparation. Ramsey Solutions did a recent survey of over 1,000 adults to evaluate American retirement readiness and found only a 2% difference between the three groups -- over 75% say they are either “very confident” or “somewhat confident” that they will have enough, while 64% of the overall respondents feel that way
58% of Millennials who are already saving for retirement started their savings at an average age of 23. A third of this group say they’ll start saving – with an average age of 33. Three-quarters wish they were already investing more, and almost 8 in 10 say they intend to save more in the future. 39% of these savers set aside up to 9% of their income for retirement – the average annual income being $55,200.
The average Millennial debt load is just over $30,500 (student loans, credit card debt and mortgage debt) and the cost of living and meeting their children’s financial needs are their biggest obstacles to saving more.
64% of all people surveyed expect Social Security to be their top source of income. But Millennials rank Social Security (44%) behind their own savings through a 401(k) (58%) and personal savings/cash (54%).
More than half of Baby Boomers count on Social Security for all or most of their retirement income while only 28% of Millennials expect this. Only 18% of those surveyed expect a pension to provide any part of their retirement income.
History has shown that many Baby Boomers found their retirement expectations to be unrealistic and one can only guess if this will turn out differently for Millennials or Gen Xers. These two younger groups don’t give Social Security nearly the expectation for retirement income, and private sector traditional pensions have seen a vast demise.
All these are excellent reasons to encourage 401(k) savings among all possible participants. Please feel free to contact QBI to let us know how we can help.