Gen Z & Millennials Report Higher Confidence in Retirement Planning (2024)

NEW YORK, NY, Wednesday, May 29, 2024 –As retirement planning becomes an increasingly individual responsibility for working Americans, generations report starkly different outlooks on their ability to adequately save for a long, comfortable retirement, according to the most recent Goldman Sachs Asset Management annual retirement report, Diving Deeper into the Financial Vortex: The Generational Divide.

While most impacted by the challenges of the financial vortex, the report highlights positive momentum by younger generations, Generation Z and Millennials, seizing the initiative early to get their savings on track. Their seniors, Generation X and Baby Boomers, often report falling behind in saving efforts and having difficulty catching up before they retire, voluntarily or not.

The survey demonstrates that the next plan innovations should focus on helping people stay on track and navigating the many competing financial challenges that threaten to derail progress.

Retirement Plans: Making an Impact on Younger Generations?

Survey results highlight the progress plan sponsors have made to encourage Americans to save early in diversified portfolios through automated, cost-effective solutions, including automatic enrollment, automatic escalation, and default professional asset allocation strategies. By taking advantage of these and other innovations, younger generations can take more proactive steps to help better manage their finances, as they appear to be:

• 67% of Millennials and 60% of Gen Z have a personalized plan for retirement
• 69% of Millennials and 68% of Gen Z report savings on-track or ahead of schedule

Yet the 401(k) transition looms large for Gen X and working Baby Boomers, and many working Americans have taken a long time to adapt to the new retirement system – some too long. As a result, 45% of Gen X and working Baby Boomers report their savings are behind schedule, and the same percentages do not have personalized retirement plans. This means many may lack coherent strategies for how much to save, how to invest, and when they can afford to retire.

“Studying retirement savings across generations brings into focus valuable insight into the changing macro-dynamics Americans face,” said Greg Wilson, Head of Retirement at Goldman Sachs Asset Management. “With the journey growing increasingly personal, our industry must innovate solutions that better meet savers where they are. Enhanced education and advice that can help them create personalized plans should be integral to everyone’s retirement plan design.”

Financial Vortex Can Sneak Up on Retirement Savers

The Goldman Sachs Asset Management report shows many people can be blindsided by serious and unanticipated changes in life priorities, such as decreased or no retirement saving during time off from the workforce for caregiving of children or older family members, or job losses.

“The challenges brought by the financial vortex can shift and grow in difficulty as we age,” Mr. Wilson said. “To keep our retirement savings on course, we must anticipate these challenges and factor them into carefully and thoughtfully designed financial plans.”

EXHIBIT 1: Impact of Financial Vortex:

“The path to retirement is challenging for each generation, but with better financial education, initiative-taking measures and strategic planning, we can all navigate these hurdles successfully,” said Chris Ceder, Senior Retirement Strategist at Goldman Sachs Asset Management.

Some of the key findings of the Goldman Sachs Asset Management report for each generation are as follows:

• Generation Z
  
  • Off to a Good Start, with median retirement savings of $29,000, 68% of our respondents believe their savings are on-track or ahead of schedule. The first 10 years of saving is attributed to 41% of total retirement savings; early saving can result in 68% higher savings than people who start saving 10 years into their careers.
  • Confident and Proactive: 60% already have a personalized financial plan, particularly for other financial goals, such as buying homes and cars, saving for vacation.
  • Planning Assumptions May Be Aggressive: 44% expect to retire before 60; 75% plan to retire with less than 70% of their working income; 61% expect to fund less than 50% of retirement with personal savings, versus Social Security or pensions.
    
    
  • Emergency Savings Most Wanted Plan Enhancement, reported by 37% of Gen Z respondents, with 36% seeking professional financial planning and advice services, and retirement strategy education third at 28%.

• Millennials
  • Most Impacted By The Financial Vortex among all generations. Student loans, education costs, home buying, and caring for children and parents can take a heavy toll on retirement savings, but 69% report being on-track.
    
    
  • Most Likely to Have a Personalized Financial Plan, highlighting proactivity.
    
    
  • Most Likely to Manage Their Own Retirement Savings, at 52%, while 25% manage themselves but periodically seek advice, and 11% pay a financial advisor.
    

• Generation X
  • Beginning to Face Challenges of Early Retirement: Some are beginning to enter retirement earlier than expected, chiefly due to poor health or family issues.
  • Leading Our Nation’s Experiment Away from a Pension System to 401(k)s, requiring individuals to save and prepare for their own retirements. Their experiences with saving challenges, competing priorities, plan defaults, financial education, and more are leading to major shifts in American retirement strategies.
    

• Working Baby Boomers
  • Retiring Later than prior retirees, with most targeting between age 65 to 69 (vs. 60-64). Many still feel unprepared, only half reporting they are on schedule.
  • Top Concern: Future Healthcare Costs (taking the place of inflation), which may drive future spending uncertainty. Guaranteed income is still the most desired feature for those nearing retirement to help them retire successfully.

“Plan design innovations implemented over the past 20 years have helped to improve retirement savings for millions of people,” Mr. Ceder said. “When plan sponsors and advisors design the next wave of solutions to meet the evolving needs of employees, it is important they consider how emergency savings, financial education, personalized planning technology/managed accounts, and guaranteed income fit in.”

“Personalized planning solutions, in particular, are increasingly important to help Americans navigate the myriad challenges of the financial vortex, now and in the future. It is important for plan sponsors to consider the role of these solutions in their retirement plans.”

Methodology

The findings discussed are based on a July 2023 survey conducted by Goldman Sachs Asset Management and Qualtrics Experience Management of 5,261 US individuals. A diverse set of perspectives came from 3,673 working people (age 21 to 75) and 1,588 retirees (age 50-75) from the Baby Boomer, Generation X, Millennial, and Generation Z generations.

To better understand how people make retirement savings decisions in the face of many competing priorities, we engaged Syntoniq. Syntoniq is a behavioral finance technology company specializing in behavioral analysis that empowers individuals to better understand financial decision-making and bridge the gap between their financial objectives and outcomes. Syntoniq brings decades of combined research experience in behavioral science, social psychology, and quantitative finance to turn psychological insights into measurable value.

About Goldman Sachs Asset Management

Bringing together traditional and alternative investments, Goldman Sachs Asset Management provides clients around the world with a dedicated partnership and focus on long-term performance. As the primary investing area within Goldman Sachs, the business delivers investment and advisory services for the world’s leading institutions, financial advisors, and individuals, drawing from a deeply connected global network and tailored expert insights across every region and market. Goldman Sachs Asset Management has $2.5 trillion in assets under supervision globally as of December 31, 2023. Driven by a passion for their clients’ performance, Goldman Sachs Asset Management seeks to build long-term relationships based on conviction, sustainable outcomes, and shared success over time.

About Goldman Sachs

The Goldman Sachs Group, Inc. (NYSE: GS) is a leading global financial institution that delivers a broad range of financial services across investment banking, securities, investment management and consumer banking to a large and diversified client base that includes corporations, financial institutions, governments and individuals. Founded in 1869, the firm is headquartered in New York and maintains offices in all major financial centers around the world.