Gen Z and millennials surpass older generations on retirement readiness

• Key Insight: Discover how Gen Z and millennials are reshaping workplace retirement strategies.
• Expert Quote: Cathy Marasco: younger generations lean on HR and tools, boosting retirement optimism.
• Supporting Data: Gen Z began 401(k) contributions at age 23; millennials at 28.
• Source: Bullets generated by AI with editorial review

Young professionals have seen first-hand how expensive it can be to delay retirement savings — and they're dedicated to avoiding older generations' mistakes. 

More than 80% of Gen X and baby boomers regret not participating in their retirement plan earlier, according to a recent report from insurance company Nationwide. In comparison, roughly seven in 10 younger savers say they already have a strategy to safeguard their savings before retirement, compared to just 55% of Gen X and 44% of baby boomers. This proves that Gen Z and millennials are ready to be proactive about their retirement, but could still use their leaders' help to get there. 

"These younger generations are really taking more action than the older generation," says Cathy Marasco, Nationwide's protected retirement leader. "They're using their resources and relying on HR teams and it's making them feel more positive about retirement overall."

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Much of that confidence was born from necessity, according to Marasco. Traditional pensions have become increasingly rare, she says, with most companies replacing them with defined contribution plans such as 401(k)s — meaning young employees must successfully navigate those workplace retirement systems if they want to secure a healthy retirement. That can be challenging, since these plans place far more responsibility on individuals to actively manage and contribute to their savings over the long-term.

Fortunately, younger generations are up to the challenge. According to Nationwide's findings, Gen Z and millennials on average started contributing to their workplace retirement plans at age 23 and 28, respectively, nearly a decade earlier than Gen X and baby boomers. They're also more engaged and protection focused: Checking balances weekly, increasing contributions annually and planning ahead for market volatility. 

"Older generations had to opt in to certain benefits and services and had to make difficult investment decisions to retire comfortably," Marasco says. "But plan design is evolving and we have more tools and more advice for employees to take advantage of." 

Keeping retirement simple and boosting utilization

In order to keep employees' momentum up, Marasco urges leaders to check and see if they have auto escalation and auto enroll options available, and ensure that those features are on. In addition, they should also consider offering or promoting catch up contribution options to existing 401(k) and IRA plans — not only to help their older demographic, but to ensure young talent remains supported as they age. Creating a cross-generational retirement strategy could be the best way to recruit and retain workforces of all ages, Marasco says. 

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"Employees want these types of solutions," she says. "They don't have many other options, meaning that [proactive benefits] creates long-term satisfaction within the workforce, which can possibly make a difference."

In the future, Marasco suspects even more retirement tools and services will emerge as even younger generations enter the workforce. This kind of progress could prove to be beneficial for businesses, who will not only see higher use of their retirement benefits, but a more engaged and productive workforce. 

"When we make these processes easier, employees take advantage of it," Marasco says. "And when people can retire on time, they feel good about their jobs and feel good about the outcome of their futures."