As we venture into the second quarter of 2024, retirement savers have witnessed noteworthy growth, marking the third consecutive quarter of progress. A particular highlight from this period is the substantial increase in individual retirement arrangements (IRAs) among Gen X savers, showcasing significant strides in their journey towards financial security post-retirement.
The data, sourced from 26,100 corporate defined contribution plans and encompassing approximately 32 million participants, was compiled in a report by Fidelity Investments. The report highlights a surge in average account balances, reaching the third-highest average on record, demonstrating a positive trend in retirement savings. Average 401(k) and 403(b) balances have seen an increase of 13% and 12%, respectively, since the same period last year. Although total savings rates remained relatively stable from the previous quarter, there was still a slight uptick from a year ago.
Key insights from the report include:
- Women’s 401(k) balances rose by 13.2% compared to the same period in 2023, surpassing men’s 12.5% increase.
- Gen Z women experienced an impressive 51% year-over-year growth in savings.
- Baby boomers lead the pack in average retirement savings balance at $242,000, followed by Gen X ($182,000), millennials ($62,000), and Gen Z ($12,000).
Furthermore, the report sheds light on millennials and Gen Z workers placing their savings predominantly in target date funds, a contrast to baby boomers who have a loan outstanding in less than 15% of cases.
Despite historical narratives surrounding Gen X’s challenges in retirement savings, the report underlines their steady progress in fortifying their nest egg. Gen X witnessed a remarkable 30% increase in total IRA contributions over the past year, with current contributions reaching a five-year high.
The study, delineating generations based on Pew Research Center’s definitions, showcases a more detailed breakdown of the cohorts:
- Baby boomers: born between 1946-1964
- Gen X: born between 1965-1980
- Millennials: born between 1981-1996
- Gen Z: born between 1997-2012
A recent survey by Allianz Life indicated that while 62% of Gen Xers feel confident about their financial futures, a substantial portion regrets not saving more for retirement. This sentiment is amplified among Hispanic and Black members of the cohort, with 63% and 56% respectively voicing their wish for more robust retirement savings.
However, amidst these challenges, there is a glimmer of foresight among Gen X members, as they start contemplating housing options conducive to aging in place. The generation is proactively considering their living arrangements in their later years, showcasing a proactive approach to their future well-being.
In conclusion, the landscape of retirement savings is evolving, with Gen X making commendable strides towards securing their financial futures. As we navigate the ever-changing financial terrain, it becomes imperative for all generations to assess their retirement plans meticulously, laying a robust foundation for a comfortable life beyond the workforce.
