Youngest Generation Needs Retirement Savings Lessons
August 28, 2012 (PLANSPONSOR.com) - When it comes to retirement planning, Generations X and Y seem to have learned from the mistakes of their elders.
According to new survey findingsreleased by TD Ameritrade, nearly 60% of Gen X (59%) and Gen Y (56%) make regular, automatic contributions to their retirement savings, compared with 46% of non-retired Baby Boomers. When it comes to getting a jump on their nest egg, younger generations are eager to get started—both Gen X and Gen Y started saving for retirement, on average, in their mid-to late-twenties—nearly a decade earlier than Baby Boomers who, on average, started saving at age 35.
However, teens and young adults of what TD Ameritrade calls Generation Z (ages 13 to 22) seem misguided about retirement planning.
According to a second survey, Gen Z generally understands the importance of saving money—more than half (56%) said they have a savings account—thanks to the influence of early conversations about money with their parents. But those conversations have largely been about saving in general (82%) or saving for college (67%), rather than preparing for retirement (38%). Just 8% of Gen Z reported they are currently saving money for their “golden years.”
In addition, only 35% of Gen Z respondents said they believe they will not be able to count on Social Security when they retire and therefore should save money for themselves, compared with 61% of parents who reported the same. Thirty-nine percent of Gen Z respondents believe they will have an inheritance and therefore do not need to worry about saving for retirement, compared with just 16% of parents who reported they believe the same for their Gen Z children.
Forty-three percent of Gen Z respondents say you can never start saving too early for retirement, compared with 71% of Gen Z parents.
For the Gen Z survey, 2,001 U.S residents participated in an online survey from April 27 to May 1, 2012, by Head Research. Gen X and Gen Y data was based on an online survey with 2029 U.S. residents from March 27 to 28, 2012, by Head Research.