Unless you win the $1.2B Powerball or manage to make a fortune selling AI girlfriend bots, you can always rely on the tried and true method of retiring — saving more.

Millennials are pretty good at it: According to Vanguard’s Retirement Readiness report, older millennials’ (aged 37-41) retirement savings are on their way to surpassing late boomers (aged 61-65). Millennials at the 50th income percentile level are expected to generate sustainable retirement income equal to 58% of their pre-retirement earnings — vs. 50% for late boomers at the same income level.

• Vanguard’s Fiona Greig says, “The retirement savings picture is getting stronger with each passing generation,” with the popularity of auto-enrollment into defined contribution plans like 401(k)s contributing to the growth (WSJ)
• Of the companies that use Vanguard’s 401(k) services, 60% of new hires are auto-enrolled — up from 10% in 2006 when Congress passed a law to make the practice easier. But the same can’t be said for Gen Z…

Habits of younger generations are vastly different

Especially when it comes to retirement — which has become an afterthought for many. According to a 2023 Transamerica Center Survey, 56% of Gen Z would rather “not think about retirement investing until later.”

• Doesn’t mean they’re not motivated. Retail Insider says a Bank of America survey shows that 72% of Gen Z have a side hustle, with the majority bringing in $500-$1K monthly.
• It’s just being spent differently. An Intuit survey found that Gen Z would rather spend on passions or hobbies, with 73% prioritizing quality of life over extra money in the bank.
• They’re also spending more. According to Visa data, Gen Z was the only age group to have spent more in the final months of 2022 than the year prior.

And financial experts are worried about their habits, with Transamerica’s CEO saying, “Four in ten Generation Z workers have taken a loan, early withdrawal or hardship withdrawal,” which can have tax consequences and disrupt the effects of compounding (NYT).

Guidance for the golden years: Another Transamerica survey found that 45% of retirees said they “waited too long to concern themselves with saving and investing for retirement.” Take this as your sign to listen to your elders.