No pension, no problem: Goldman Sachs report shows younger generations preparing for retirement more than boomers

That’s according to a new report from Goldman Sachs Asset Management, which surveyed more than 5,200 working and retired people across generations. The report, which examined the various barriers to saving for retirement among baby boomers, Generation X, millennials, and Generation Z, found that younger generations were more confident in their ability to achieve their goals.

About 45% of Gen Xers said they are behind on saving for retirement. With the introduction of 401(k)s, that generation (and the youngest boomers) were the first to start saving primarily for themselves, which created a shortage of cash; Goldman calls them the “401(k) experimental” generation. The report shows that Gen Xers—the oldest of whom will turn 60 next year—are retiring earlier than expected, not because they have money but because of their needs health or family care.

Baby boomers, too, are not as confident of saving enough for retirement as might be expected given the headlines about their unprecedented wealth. . Now aged 60 to 78, they also report retiring later than generations before them, a trend that early research supports. Some just need to work long hours for a salary, while others, motivated by health and longevity, want to stay at work as long as possible.

“401(k) changes loom large for Gen X and working-class kids, and many working Americans have taken a long time to adjust to the new retirement system—some for too long,” the Goldman report says. “Many may lack strategies for how much to save, how to invest and when they can retire.”

A separate report recently noted how more than 50% of so-called super-rich people—those who have reached the standard retirement age—have accumulated $250,000 or less, meaning they will burn through assets even any they have collected and rely on Social Security. Women in that generation are faring worse than men, holding about 30% less, and Hispanic and Black boomers have significantly less wealth than white retirees.

‘be careful’

Young people, however, are under no illusions that they can rely solely on external contributions to fuel retirement. So they’ve started saving themselves, and at a younger age than their predecessors: Gen Z, born between 1997 and 2012, has a retirement savings of $29,000, and 68 % believed to be on track, very high. share more than Gen X or boomers, according to Goldman.

That’s promising news. The report makes it clear what a big difference there is in the first decade of saving the size of a person’s nest egg. Assuming a $50,000 starting salary with 2% annual salary increases, 5% employee and employer contributions, and a 6% annual return, savings during the first 10 years of A person’s work can lead to a higher saving of 67% compared to he waited a long time to invest, according to Goldman figures.

However, some perspective may be required. The report also found that a large proportion of Gen Z want to retire early: 44% said they want to retire before age 60, and 14% said they plan to retire between 65 and 69. But that is a motive that can prove. difficult in today’s economy—especially because of increases in life expectancy that can add a decade or more to retirement.

The report reads: “Gen Zers should remember that the sooner they prepare for their career, the harder it will be to find.”

‘Financial method’

The oldest Millennials, now approaching middle age, are facing a confluence of factors that Goldman calls a “financial vortex”: The combination of student loan payments, credit card debt, maintenance costs of children, buying a house and caring for elderly parents or family members are reduced. potential retirement income. (In particular, Gen Z isn’t far behind.)

However, millennials are still the generation most confident in their ability to retire: 69% said they are on track or well ahead of their savings, and 43% have and high confidence that they will achieve their goals, compared to 25% of Gen X. and 22% of working boomers.

That appeals to a generation that has been dealing with financial problems after the recession, as well as the increased costs of necessities like housing and childcare. Recent research from the Federal Reserve has found that millennials—at least the wealthiest—are making huge gains in accumulating wealth.

In several respects, it’s been easier for some of them: They’ve learned from older generations, but they’ve had more and better options for saving for retirement, such as automatic enrollment, Chris Ceder, senior retirement strategist with Goldman Sachs Asset Management, said Good luck.

“These generations are actively planning for retirement and taking advantage of the resources available to them,” Ceder added.

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