Nearly 60 percent of Gen X and Gen Y make regular, automatic contributions toward their retirement savings, compared with 46 percent of non-retired baby boomers, according to a new survey released today by TD Ameritrade Holding Corp.
Gen X and Gen Y say they started saving for retirement, on average, in their mid- to late twenties, nearly a decade earlier than baby boomers who, on average, started saving at age 35, the survey showed.
"Gen X and Y have accepted the reality of the past few years, and rather than being discouraged, they are using what they've witnessed to their advantage by saving earlier and regularly," says Carrie Braxdale, managing director, investor services, TD Ameritrade Inc., the broker-dealer subsidiary of TD Ameritrade Holding Corp., in a prepared statement. "The hope is that tomorrow's investors, Gen Z, follow suit as they near retirement."
However, based upon the survey, it's unclear to whether Generation Z (people aged 13-22) has been discouraged by the financial gloom and doom of the Great Recession or driven to save more. According to the survey, Gen Zs generally understand the importance of saving money, with 56 percent indicating they have established a savings account -- the outcome of early conversations about money with their parents. But those conversations have largely been about saving in general (82 percent) or saving for college (67 percent), rather than preparing for retirement (38 percent).
Eight percent of Gen Z reported they are currently saving money for their "golden years." According to the survey, many Gen Z savers have a very different outlook on retirement saving and timing when compared with their parents:
Thirty-five percent of Gen Z respondents believe they will not be able to count on Social Security when they retire, and therefore should save money for themselves, compared with 61 percent of parents who reported the same.
Thirty-nine percent of Gen Z respondents believe they will have an inheritance, and therefore don't need to worry about saving for retirement, compared with just 16 percent of parents who reported that they believed the same for their Gen Z children.
Forty-three percent of Gen Z respondents believe that you can never start saving too early for retirement, compared with 71 percent of parents.
2,001 U.S residents participated in the online survey from April 27 through May 1 by Head Research on behalf of TD Ameritrade Holding Corp. The 2,001 respondents were drawn from major regions in proportion to the U.S. Census -- New England (5%); Mid-Atlantic (16%), South (25%), Midwest (22%), Southwest (12%) and West (20%). In each region, approximately half of the respondents were male and half were female.