Retirement Savings

Generations: Going Separate Ways

November 21, 2017
Research shows that various generations have different ideas of how to best prepare for retirement.

Key Points

  • The three generations that make up the majority of Americans are hitting milestone birthdays.
  • T. Rowe Price research indicates that the generations have varying levels of preparedness for retirement.
  • Whatever your age, how much you set aside and how long you save are two factors that have the most impact on your long-term goals.

The three generations that make up the majority of Americans are hitting milestone birthdays—the first members of the baby boomer generation turn age 70, the Gen X group just passed 50, and the millennial cohort turns age 35. Boomers may be the closest generation to retirement, but they’re not the only age group planning for the day they’ll stop working. According to research from T. Rowe Price, 66% of working Americans said contributing to a 401(k) or another type of tax-deferred retirement account was a top financial priority.

While various generations are at different levels of preparedness, T. Rowe Price’s study also indicates the age groups have different ideas about how to best get ready.


While it may be youthful optimism, the millennials surveyed by T. Rowe Price possess a positive attitude about their current and future financial status. Millennials who are saving in a 401(k) plan are outpacing financial expectations. Of those who are working, many report being well positioned for financial success. Not only are millennials contributing at a similar rate to their 401(k)s as Gen Xers, but they also have more time on their side—the efforts they make now to save and invest for their future have decades to realize growth potential.

The study also indicates, however, that millennials lack the knowledge needed to go it alone—58% say they would benefit from having someone help with spending and debt management. These millennials could rely on automated plan services (if offered) to get started, as well as advice and guidance to keep them on track.

Gen Xers

Gen Xers are well into their careers and have seen their earnings rise since their 20s. But their financial demands have increased as well, including often supporting young children and aging parents simultaneously—which can make it challenging to prioritize savings goals. That dichotomy shows up in the T. Rowe Price study; about 70% of Gen X workers felt somewhat, or very, comfortable that they will be able to meet their financial goals in retirement. However, 28% of Gen Xers surveyed believe they may run out of money in retirement, given the savings they have in place right now (versus 22% of millennials).

Baby Boomers

As a group, baby boomers have prioritized their retirement savings and contribute more than any other generation. Recent boomer retirees are reporting that many in their cohort are faring quite well with managing their finances and are transitioning into retirement with adequate savings. In fact, according to T. Rowe Price’s research, retirees who are in their first five years of retirement are living on an average of 67% of their preretirement income, and 88% say they are satisfied with retirement so far.


The common threads

How best to achieve your retirement savings goal varies considerably depending on your age and personal circumstances.

However, whatever your age, how much you set aside and how long you save are the two factors that have the most impact on your long-term goals. They are also the factors most in your control.

Regardless of your age, consider the following steps:

1. Take advantage of any company match.

Contribute at least enough to your workplace plan to receive the full company match, if offered by your plan. That way, you’ll receive the maximum amount of additional money to which you’re entitled.

2. Save at least 15% of your gross income.

Contributing to retirement accounts at the 15% level (including any employer matching contributions) can help you cover your expenses over a retirement that may last three decades or longer.

3. Consider Roth contributions.

A Roth IRA or Roth plan contributions, if offered by your employer plan, may be the better choice for your retirement savings, unless you are age 50 or older and expect your tax bracket to decrease significantly in retirement.

4. Maintain appropriate equity exposure for your age.

Equities offer greater long-term potential return than other asset classes, such as fixed income and cash. Your age and tolerance for risk will help you determine the precise amount of equities to hold.

Next Steps: