July 12, 2024

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Surprise: Supposedly irresponsible millennials and Gen Xers are better prepared for retirement than baby boomers, report says

2 min read

This finding by investment advisor Vanguard seems contrary to years of economic research that projected millennials would be worse off than the generations that preceded them. Younger generations have had to weather a number of economic tsunamis: the financial crisis that started in 2007, which struck as many of them were entering the workforce; a crushing housing market that’s made homeownership a fantasy for many; and then yet another economic downturn during the pandemic. 

However, financial advisors Fortune spoke to said the better retirement readiness was a result of decades of new regulations that made it easier for millennials to save for retirement, especially when compared to when boomers first entered the workforce roughly 40 years ago. 

“It’s funny, I’ve always said that the younger generation has really got it going on,” says Steve Azoury, an independent financial planner from Troy, Mich. 

For its research, Vanguard measured the percentage of pre-retirement income and savings of households at different income levels needed to retire comfortably and how far from that target they actually were. In all but the lowest quartile of households, boomers are projected to be less prepared than younger generations. Meanwhile the poorest Americans, regardless of their age, were equally unprepared for retirement. 

The study only factors in a small slice of ages within the millennial, Gen X, and boomer generations because looking at the entirety of each generation, spanning some 20 years, would have been too difficult to accurately project, according to Fiona Greig, global head of investor research and policy at Vanguard and coauthor of the report. Within the study Vanguard’s researchers only looked at financial holdings, such as stocks, cash, and bonds, and didn’t include housing, which can be a significant source of an individual’s net worth that can be tapped for retirement. 

One of the main reasons that younger generations are, perhaps…

Paolo Confino

2023-12-03 07:00:00

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