Millennials Surpass Baby Boomers in Retirement Savings, Vanguard Study Finds

A recent study conducted by Vanguard has revealed a surprising trend in retirement savings. Contrary to popular belief, millennials are actually more on track for retirement savings than baby boomers. This positive outlook for millennials is attributed to changes in retirement plan design.

As millennials entered the workforce, many were automatically enrolled in retirement plans, often with features like target-date funds and automatic increases in employee contributions over time. These factors have put many millennials, and even some Gen Xers, on the right track for a secure retirement.

Vanguard projected retirement readiness for three generations: early millennials (ages 37-41), mid-Generation X (49-53), and late baby boomers (61-65). The analysis revealed that younger Americans fared better than their older counterparts. For example, millennials at the 50th income percentile can expect to generate sustainable retirement income equal to 58% of their preretirement earnings. While there is still a gap to be filled, this estimate is eight percentage points better than the projection for median-income late boomers (50%).

Unsurprisingly, high-income workers across all generations are better prepared for retirement compared to those with lower incomes. Workers at the 25th income percentile face a projected retirement savings gap of 32%, whereas high-income families have a savings surplus of 20%.

This study challenges the perception that millennials are financially struggling and highlights the positive impact of automatic enrollment and innovative retirement plan features. It is encouraging to see that younger generations are taking steps towards securing their financial future.

In conclusion, the Vanguard study reveals that millennials are surpassing baby boomers in retirement savings, thanks to changes in retirement plan design. This positive trend highlights the importance of automatic enrollment and innovative features that help individuals save for a secure retirement.