Your generation’s retirement: Unique challenges, common concerns

A young woman on vacation with a river in the background.

Hip hop or classic rock? Apps or newsprint?

In a whole host of ways, each generation tends to look at life a little differently. In much the same way, when it comes to retirement planning, different stages of life present very different viewpoints and challenges.

Generally speaking, there are about six generations living in America today. Of these, about three or four are active in the workplace starting with Gen Z (born 1996 and after). Millennials, or Gen Y, (born 1977-1995) is next, followed by Generation X (born 1965-1976), and the influential Baby Boom generation (born 1946-1964) is at the tail end pondering what will be its next steps in life.

When it comes to saving for retirement, the older generation is likely striving to maximize their savings during those remaining working years. But if you’re a younger worker, in today’s economy, your challenge may be finding the extra cash – and the discipline – to begin investing for a future need that’s still a long way off. Yet for younger workers, building your own savings is more crucial than ever. According to CNN Money, the percentage of workers in the private sector whose only retirement account is a defined benefit pension plan is now 4%, down from 60% in the early 1980s. About 14% of companies offer a combination of both types.1 The availability of a traditional pension certainly impacts a worker’s perception of retirement security and whether or not they choose to save in a voluntary retirement account like a 401(k).

While each generation faces distinct challenges, they also share some troubling similarities. Namely, a report by GOBankingRates finds that the top three impediments to saving across all age groups are debt, high cost of living, and low salary.2

What Gets in the Way of Saving?

Biggest Obstacle to Saving Money, by Age

  Debt High cost of living (rent, food, utilities) Low salary No budget No savings account Non-essential costs (eating out, luxuries)
18-24 11.73% 22.13% 20.53% 20.27% 10.67% 14.67%
25-34 19.20% 24.69% 18.11% 17.97% 6.45% 13.58%
35-44 18.63% 26.27% 16.62% 16.35% 6.57% 15.55%
45-54 18.86% 26.53% 19.64% 12.87% 5.33% 16.78%
55-64 16.69% 31.73% 22.41% 12.33% 4.06% 12.78%
65+ 11.29% 36.07% 20.58% 12.39% 5.28% 14.39%

From too much debt to too little income, these obstacles affect all the generations to varying degrees – and most workers are simply not saving enough to ensure a secure retirement. This is why, regardless of your age or which generational cohort you belong to, there are simple steps you can begin to take today to help your chances of reaching a comfortable and secure retirement.

Here are some tips to help you prepare for retirement depending what generation you’re part of.

Generations Z and Y (Roughly to age 42)

  • If your employer offers a retirement plan and you’re eligible to participate, sign up. Signing up is the hardest part.
  • Begin saving as early as possible, to put time and the power of compounding on your side.
  • Develop good financial habits – and make saving part of your monthly budget, just like housing or food. There’s a way to balance paying off school debt and beginning to save for the long term. It’s all about committing to it. Start now, even if it’s small, but start.

Generation X (About ages 43-54)

  • As you get better footing in your career and your income increases, so should the amount you save every year. Commit a portion of your pay raise to saving. Say your raise means you’re getting an additional $2,000 per year. Save $250 or $500 of it by adjusting your 401(k) contributions so the money goes directly into your retirement savings account.
  • Stay focused; don’t let major expenses such as home buying and college costs distract you from your long-term goals. Save for these other things separate from your retirement savings. If you can’t pay for major expenses without making sacrifices elsewhere, then temporarily reduce what you’re saving for retirement but don’t stop completely. It’s like running. If you stop completely it’s much harder to start again. Simply slow down until you’re ready to pick it up again. Maybe look to use an automatic deferral increase feature if it’s available in your plan.

Baby Boomers (About age 55 and over)

  • As your children leave the nest and your mortgage is paid down, put that extra money toward your retirement. At this point in life, there’s probably no better place for it!
  • Consider taking advantage of catch-up contributions to ramp up your savings even more. The closer you get to retirement, the better idea you’ll have about how ready you are financially. And for most of us, there’s usually some catch-up involved at that point. Take advantage of what the tax code allows you to do and put more tax-deferred dollars toward your retirement.

Even though the year you were born says a lot about what your retirement saving challenges are, what the next best steps might be for you, or how you feel about saving and retirement in general, one thing doesn’t change. The sooner you take action, begin to save, and keep up with your plan the better you will likely be when you reach retirement. While savers from different generations may not agree on musical styles or how to keep up with the news, there’s one thing we can all agree on – that is our desire to achieve a safe and secure retirement.





Press inquiries: Christine Hotwagner
Director, Program Operations
ABA Retirement Funds


About the ABA Retirement Funds
The ABA Retirement Funds, an affiliate of the ABA, is dedicated to helping lawyers with their retirement by providing fully bundled retirement solutions for law firms of all sizes. Established in 1963, the organization has over 4,000 law firm retirement plans, more than 38,000 participants, and over $7.2 billion in assets in the ABA Retirement Funds Program (as of 12/31/2020).

The information in this article is believed to be reliable. However, this newsletter is distributed with the understanding that the Program is not engaged herein in rendering legal, tax, accounting, investment management or other professional advice.


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