They say nothing is certain but death and taxes, but at Fisher Investments 401(k) Solutions, we’d add retirement to that list, at least for Americans. As new generations enter adulthood and the workforce, they’re immediately met with the looming responsibility and expectation of planning for their eventual retirement from the workforce. Even with social programs in place, like Social Security and Medicare, most retirees are expected to accrue hundreds of thousands of dollars in savings to live through their retirement.

Average Retire American Budget 2016

A general rule of retirement savings suggests that you save enough to safely withdraw 4% annually for 30+ years of retirement. As the average American retiree is spending $3,600 per month, this means that they’ll need a nest egg of over a million dollars. 1

This is staggering, especially when you consider that 1 in 3 Americans report having absolutely no retirement savings.2 But when you stop to ask why 33% of the population hasn’t saved for retirement, answers vary. It’s impossible to fully understand why Americans as a whole are struggling with retirement strategies and plans when they all get lumped together. When it comes to generational workers and they’re financial goals and realities, today’s workforce is one of the most diverse in recent human history. Between Baby Boomers, Generation X, and Millennials, we’ve got a pool of workers that differs greatly amongst one another in financial priorities and goals, juxtaposed against the unique financial realities each is facing.

Helping your employees prepare for a better retirement starts with understanding how diverse they are. Each individual has their own financial goals and priorities, and their retirement dreams are directly impacted by the financial realities they’re facing as individuals and as a generation. 

Offer a Diverse Retirement Education Environment

People take in information best when it directly applies to their situation. Therefore, understanding different individuals’ retirement goals and current life stages can make the financial education offered by you and your 401(k) provider significantly more relevant to your employee base. Consider small meetings by age group, or just skip group meetings for one on ones with a professional adviser. As we’ll discuss later, how Generation X approaches their retirement differs greatly from Millennials, regardless of how important they both find saving for that day. Looking for ways to provide opportunities for your employees as a whole means being able to guide them to their financial goals with a full appreciation of their realities.

Empowering employees to retire is a two-fold process: financial readiness and lifestyle change readiness. For many new retirees, the added free time is overwhelming. What’s more, however, is that some with retirement on the horizon don’t have a proper nest egg ready to support them. Even an added couple of years of work can add to their retirement fund pot and increase the amount of Social Security benefits they are able to withdraw. Setting them up with a professional adviser can help them better understand their financial situation and empower them to better their retirement outlook in even a few short years.

“Even an added couple of years of work can add to their retirement fund pot and increase the amount of Social Security benefits they are able to withdraw.”

If you see an employee through several years of work, then you’re likely to be around through some of their big life moments, like getting married, having children, buying a home, financially supporting parents, or helping children through college. These kinds of moments alter how an individual approaches their finances, including financial goals and priorities. Showing commitment and personal appreciation for your employees means being there for them during these big moments. Every so often, your HR department should touch base with each employee to gain some insight into their lives, their financial goals, and how the company can help them along the way. If you’re wondering how these goals and challenges might differ generation to generation, read on. 

Millennials (18-34)

Millennials reitrement 401(k)

Because Millennials are the most educated generation to date they are, as a whole, entering the workforce later, after college and maybe even graduate school. For the most part, this means that they are just starting to get financial footing when they’re in their mid to late twenties, whereas their older peers may have started working right out of high school. This results in a difference of priorities—Millennials are staying single longer and focusing on career goals at the time when generations before were getting married and starting a family. 

Among typical expenses, like housing and car payments, one big reason for a difference in priorities is the virtually generation-wide student loan debt. The added expense of these several hundred dollars a month for most young people makes a large impact on the way Millennials budget, save, and prioritize their financial goals.


Still, with over 43% saying that buying a home is still their number-one long-term home buying seems to be at the top of their priorities.3 Out of the three largest priorities shared between Millennials and Generation Xers, the Millennial priority to buy a home is actually stronger than Generation X. This motivation is unfortunately coupled with an increase of the average cost of a house over the last 30 years. While we’ve seen an average income increase of 27%, the average price of housing is actually over 4.6 times higher, going from around $76,000 in 19802 to $352,475 in 2016.4 This challenge makes it even harder for Millennials to meet that goal, especially when they’re dealing with that aforementioned student loan debt, which may equal the cost of a house in some cases.

“While most Millennials consider saving for retirement important, 26% of them are keeping their assets in bank accounts rather than retirement investments.”

What does this habit say about Millennials as a whole? Their current overwhelming financial priorities—namely, debts—are overshadowing future financial priorities, like setting up retirement plans. Of course, over time, this is expected to change—more Millennials will begin families and gain some footing in their finances post-education. As an employer providing retirement savings solutions, you’re in a position to help them better understand what opportunities and options are available to them for preparing for their future alongside of their current financial needs. This is where sacrificing other priorities is coming into play.

Generation X (35-50)

Gen Xers are more focused on family life, which plays a huge role in their financial priorities. Unlike Millennials and Baby Boomers, who aren’t considering children and family nearly as much when it comes to their financial priorities, Generation X is looking to build a future for their children, and may even do so at the risk of their own retirement. With higher education becoming an ingrained part of the education cycle, many Gen-Xers are contributing funds that would otherwise be for retirement instead to college 529 savings plans.

They’re also finding themselves sandwiched between generations—47% are caring for their senior parents and their children at once. With so much going on in their lives, they find it difficult to understand how they can gain financial traction and build towards a retirement strategy outside of their current financial responsibilities. 26% of Gen Xers are worried that caring for two generations on their own will negatively affect their ability to meet any financial goals. This is why Generation X is sometimes referred to as “The Worried Generation.”

Many Gen-Xers were hit hard during the stock market crash of 2008. Whether they suffered from purchasing a home and their mortgage going under, or from their invested nest egg funds dwindling during the crisis, these employees have become increasingly stressed about their finances. Even those who managed to avoid financial ruin were wary to re-invest their funds, which meant they didn’t benefit from the eventual bounce-back. It’s enough for them to prioritize managing their finances today while preparing for their children’s future tomorrow. 

“Gen-Xers are contributing funds to college 529 savings plans for their children’s future instead of to their own retirement.”

When it comes to saving, Gen Xers simply face a harsh reality that comes with their hectic financial crossroads. A recent study found that Americans aged 45-65 have saved an average of only $291,297 as opposed to the $938,529 they are expected to need for a stable retirement. That same study also shows that those who are closer to retirement age (55-65) are less than halfway towards their retirement goal. These individuals see the need for retirement savings, but their reality isn’t enabling them to achieve that vision. In fact, 54% of Gen Xers are already certain they’ll need to work during retirement, or won’t be able to retire at all. 5

As a whole, Gen Xers are at a loss when it comes to understanding how they can manage everything on their current plates while still preparing for their own retirement. They fail to see how the bigger picture comes together and what they need to do in order to contribute an adequate amount to their retirement savings. A good push in the right direction can help many Gen Xers get on the right track to a stable retirement.

Gen X & Millenials retirement costs

Baby Boomers (51-69)

When we think of retirees, we’re looking at the older half of the Baby Boomers who are now making their moves toward retirement, where their financial priorities include further saving for expenses, reducing any debt, and having enough insurance for increasing medical needs. According to a poll from the Associated Press, only 11% of Boomers are convinced they will be able to live comfortably in retirement. 44% express little or no belief that they’ll have enough money when they end their careers. 1 in 4 are already planning to never be able to retire fully.24% admit to having no retirement savings at all—1 in every 4 Americans over the age of 51. 8

Baby Boomers Retirement costs

Largely, Baby Boomers are simply unprepared for retirement. In fact, of the 76 million in their generation, only 57% of Boomers entering retirement say that they are prepared to support themselves.9 This is not only due to a lack of retirement saving in their younger years, but also a lack of fully understanding the costs of retirement. Rising healthcare costs especially mean that as Baby Boomers look forward to their retirement, many of them are facing a harsh reality of not having enough in their retirement funds to meet all of their expenses for two to three decades. 10

With this dawning realization, Boomers are looking for ways to increase their retirement funds in the narrowing time they have left to work. They’re turning to their existing retirement savings plans and contributing as hard as they can, even if it comes at a cost to their lifestyle now. As a generation, they seek guidance on how they can increase their retirement savings as much as possible before they take their retirement and settle on the fixed incomes they’ve managed to prepare for themselves.

These generational tendencies raise many questions, and can invite both comparison and contrast. What’s most clear is that each generation finds themselves eager to save for retirement, but none of them feels they have the budget, the time, or the power to do so. As an employer, this is your opportunity to make the difference for the small number of lives you touch. 

“Communication, transparency, and understanding are the keys.”

Whether your employees average in their twenties or their fifties, all need to be educated about their retirement planning options, and should have the opportunity to talk to a professional about some steps for beginning savings or improving a current nest egg.  As always, communication, transparency, and understanding are the keys to guiding your employees toward planning a successful retirement.