Common sense would suggest older workers have a much easier
time saving than young adults. They are more likely to have already purchased a
home, put kids through college and, by that point, are putting more money away
A recent study by the Transamerica Center for Retirement
Studies confirms this is true, but the difference isn’t as big as you might
expect. The report shows 78% of baby boomers are saving for retirement, compared
to 77% of Generation X and 71% of millennials. The numbers may be skewed by the
fact that some baby boomers have already retired, but a 70-plus percent savings
rate is pretty impressive for younger generations.1
The message appears to be getting through: Americans need to
save more for retirement. It’s heartening to see younger adults making this a
priority, especially since many are also saddled with college student loan payments.
Regardless of what life stage you’re in, saving regularly is an important
habit. If you’re wondering which types of savings or investment vehicles are
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Another reason the millennial generation may be saving more
is that they’ve been squeezed out of the market for buying a house.2
Home values have increased significantly in certain areas of the country, giving
some potential first-time homebuyers time to focus their resources on getting
out of debt and saving and investing for retirement. This could be a silver
lining when you consider the advantages of compounding interest over many
However, millennials aren’t the only ones juggling debt. Americans
over age 60 have amassed a total debt of more than $3 trillion, mostly on
mortgages. But this generation also owes nearly $100 billion on student loans,3
suggesting people close to or in retirement are co-signing loans for children
or grandchildren, or even paying off loans on their own education later in life.
Note that one of the provisions included in the SECURE Act,
passed in late 2019, allows for withdrawals up to $10,000 from college savings 529
plans to help repay student loans.4
Content prepared by Kara Stefan
1 Transamerica Center for Retirement Studies. Dec. 19,
2019. “19th Annual Transamerica Retirement Survey.” https://transamericacenter.org/retirement-research/19th-annual-retirement-survey#compendium. Accessed Jan. 9, 2020.
2 Lindsay Walker. Cronkite News. Jan. 8, 2020. “Despite
slight uptick, millennials still face homeownership challenges.” https://cronkitenews.azpbs.org/2020/01/08/despite-slight-uptick-millennials-still-face-homeownership-challenges/. Accessed Jan. 9, 2020.
3 Angela Antonelli. Dec. 26, 2019. “When it comes to
financial angst, boomers and millennials have more in common than they think.” https://www.marketwatch.com/story/when-it-comes-to-financial-angst-boomers-and-millennials-have-more-in-common-than-they-think-2019-12-24. Accessed Jan. 9, 2020.
4 Fidelity. Jan. 2, 2020. “The SECURE Act and you.” https://www.fidelity.com/learning-center/personal-finance/retirement/understanding-the-secure-act-and-retirement. Accessed Jan. 9, 2020.
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