When it comes to saving for retirement, members of Generation X and Y (also known as Millennials), can, to quote the Graham Nash classic, teach their parents well. Though saddled with derisive monikers like “the Entitled Generation,” they are showing foresight in securing their financial futures, according to a new survey from TD Ameritrade Holding Corporation.
Eighty-five percent of working Americans have an IRA or 401(k)/403(b) retirement plan and are contributing to it, the survey found. But more of the twenty- and thirtysomethings who comprise Gen X and Y, respectively, are funding both. Twenty-three percent of X-ers and 25 percent of Y-ers are doubling down on their retirement plans, compared with 16 percent of baby boomers and 9 percent of what TD Ameritrade terms “Matures.”
They also seem to have taken to heart lessons from the recession. When asked what would be the first thing they would do with a $1 million inheritance, 62 percent of Gen X-ers and 55 percent of Gen Y-ers said they would pay off their debts.
These findings mirror results of a December investor survey conducted by Millionaire Corner that found those under 40 to be slightly more optimistic than their elders that the economy will improve over the next six months.
A majority of those TD Ameritrade surveyed are admirably saving that keeping close watch on their expenses. Sixty-three percent automatically deposit some money from their monthly household income into a savings or investment account. Sixty-two percent follow a budget, while 83 percent report tracking their household expenses. Eighty-six percent pay off their credit cards as quickly as they can.
But as boomers close in their retirement, their confidence that they won’t reach their savings goals in time is flagging. Less than a quarter (23 percent) are “completely confident” they will reach their savings goals, while nearly half (47 percent) are “somewhat confident” and 27 percent are “less confident” or “not confident.”
As for the Matures, 38 percent of those still working expect to continue to work in retirement, compared to 21 percent of boomers, 16 percent of Gen X-ers and 13 percent of Gen-Y-ers.
Interestingly, these older respondents give themselves the highest marks for the money management skills. Twenty-seven percent would grade themselves an A, compared with 23 percent of boomers, 20 percent of Millennials, and 17 percent of Gen X-ers.