Generation Save: Young People Better at Retirement Planning


NEW YORK (MainStreet) – When it comes to socking away money for retirement, young Americans are putting their parents and grandparents to shame.

That’s the conclusion of a survey by brokerage firm TD Ameritrade, which asked Americans young and old what they are doing to fund their retirement. The good news is that most of us are at least saving something for retirement: A solid 85% of Americans have either a 401(k) or an IRA, and 36% have both.

But when it comes to actually taking advantage of the full range of retirement options out there, there’s a big generational divide at work – and for once it’s young Americans who are proving to be more responsible than their elders. Just 16% of working baby boomers are funding both an IRA and a 401(k), compared with 25% of members of Generation Y and 23% of Gen Xers. “Mature” Americans (defined as those born between 1930 and 1945) fared even worse, with just 9% saying they funded both accounts.

Because the question was asked of Americans who are currently working, retired boomers weren’t included, to avoid skewing the results. And more importantly, it’s definitely not a matter of older Americans simply feeling that they’ve reached their retirement saving goals: The same survey found that 74% of boomers were not entirely confident that they’ve saved enough for retirement.

Boomers do have one very potent tool for closing the savings gap and putting themselves on pace for a more comfortable retirement: The “catch-up” contribution, which allows people older than 50 to contribute an additional $5,500 a year to their 401(k) beyond the annual limit of $16,500. But the TD Ameritrade survey found that this option is woefully underutilized: 68% of boomers said they were not taking advantage of the opportunity. Of that group, half said they couldn’t afford the additional savings, while 21% admitted they simply hadn’t heard of it.

The survey was conducted via phone interviews over the summer with more than 1,500 Americans.

Matt Brownell is a staff reporter for MainStreet. You can reach him by email at, or follow him on Twitter @Brownellorama.

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