Millennials Are Saving for Retirement Earlier, But Remain Pessimistic
April 27, 2022
Millennials are worried that they will never be able to retire comfortably, but that doesn’t mean they’re not trying.
Millennials are starting their retirement savings much earlier than their baby boomer parents did, according to a new study from Charles Schwab. The study found that most millennials are already saving for retirement in their mid-20s, nearly a decade sooner than when baby boomers began to save.
A separate study from Pew also found that millennials have higher 401(k) balances than Gen Xers did at the same age.
To some degree, this increased focus on saving early is born out of necessity. Millennials have little expectation of receiving pension plans from their employers. In 1981, 84% of full-time employees at large companies participated in a pension plan. By 2020, that percentage had plummeted to just 28%, according to the Bureau of Labor Statistics.
Despite getting an earlier start on saving for retirement, Millennials are not confident about their ability to retire comfortably. Nearly three-quarters, 73%, of Millennials said they were “significantly pessimistic” about achieving financial security in retirement, compared with 43% of Boomers, according to the National Institute of Retirement Security.
The Schwab study also found that most Millennials expect to miss out on one of the key sources of wealth growth: homeownership. About three-quarters of Boomers and Gen Xers expect to own a home in retirement, but fewer than half of Millennials expect the same.