Millennials and Gen X Not Saving for Retirement
Posted On December 27, 2011
Despite the cautionary example of Baby Boomers who are barely scraping enough together to retire, Gen Xers and Millennials are falling behind in retirement savings, according to a report from Hewitt Associates. The report shows that younger generations are not setting aside enough for retirement even though, in surveys, they say they do not believe they can count on social security or pensions to sustain them in their golden years.
The report shows that at least one third of eligible Gen X and Millennial employees elect not to participate in employer-sponsored retirement plans. Among younger Millennials, the non-participation rate is closer to 50%. Even among those who do participate, only 60% contribute enough to maximize the employer’s contribution. On average, Xers contribute only 6.3% of their income to such plans and Millennials contribute 5.3%. In comparison, Baby Boomers contribute 8% on average.
The study’s authors suggest that younger generations are not prioritizing retirement savings because many of them (at least 30%) are still burdened with debt from mortgages, student loans, and car loans. Whatever the reason, the study projects that many of them will have to step up contributions and/or work through retirement years to make up the shortfall.