Smart SpendingSmart Spending

Gen Yers are better savers than boomers

More members of Generation Y are taking advantage of both IRAs and 401k's to sock away money for retirement.

By MSN Money Partner Dec 27, 2011 7:29PM

This post comes from Matt Brownell at partner site MainStreet.


MainStreet on MSN MoneyWhen 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 401k 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 401k, 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. Post continues below.

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 401k 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.


More on MainStreet and MSN Money:

Jan 8, 2012 1:49PM

Few Gen-Y kids have pensions.  They'd better be saving more, because you have to save a ton of money to equal the guaranteed monthly payment of a pension plan.


It's too bad that companies stopped offering pensions.  When I was young, we were told that retirement income was a three legged stool-pension, savings and SS.  Today, it's a two legged stool- 401k, or its equivalent and SS.  Kids need to be saving more than we did, simply because the stool isn't balancing anymore.

Dec 29, 2011 12:22PM
a sample of only 1500?  How can this possibly be statistically relevant?  And if I were to take a sample of my clients it would be entirely different.  Many boomers are putting retirement savings on hold while they help their adult kids, grandkids etc through tough times.  This article is woefully lacking in in-depth analysis.  However let's consider the source...
Jan 8, 2012 1:05PM
A big reason why the young (that's me!) are saving more is because our parents have taught us too. My littlest sister has her first job and now has a Roth because my dad set her up. of course the older generations aren't starting up now... they won't gain much interest.
Jan 8, 2012 2:58PM

First the corporations and the Republican party brought in millions of illegal aliens for the cheap labor and to bring wages down, then they got Republican Reagan to give them all amnesty. Unsatisfied with that they kept wages down to the point were now Both parents must work to make ends meet. Still not satisfied they cut taxes on the Corporations and the wealthy and paid for two wars by fleecing the middle class. Still not satisfied they de-regulated the financial sector so that the corporate crooks could get to all those middle class 401ks and loot them. Still not satisfied they bring in millions of H1-b visa professionals to take jobs from real Americans under the pretext that they can not find qualified Americans. Still not satisfied they brought the country and the middle class to its knees and destroyed the life savings of many average Americans while giving bailouts and bonuses for failure to the wealthy.

The Republican party and its masters will not be satisfied until every middle class person is a slave who works until he drops or has to die once he gets sick since he will not be able to afford healthcare. I am only 13 but even I can see what these un-American corporations and the Anti-Real-American Republican party is doing.

Jan 8, 2012 12:32PM
Sounds like poor guidance truthhurts. Gave the little ungrateful snots all you had/have and they still want/need more. Ever stop and think you were doing them a disservice by providing for every want and need??? Your job as a parent is to mold them into self sufficient individuals that can pass on that skill. Not give little Johnny the sucker every time he whines.

Perhaps it's time to cut off the gravy train... Sounds like they realize you can be taken advantage of. Any grown adult with a conscience knows when it's time to lighten the financial burden on their parents when it's time.

And FYI - we are saving our asses off because we have watched you spend every penny on oversized/priced houses, unaffordable vehicles, and foreign manufactured junk
Jan 8, 2012 3:33PM

How can you blame the young generation in my grandpa and great grand pa's days they went off to war and many ofthem died other came back and got married and found jobs.


 How can adults today top that?

become millionares?

bring on world peace?


That is crazy because the army is turning people away and job are becomming more specialized that an 18 yearold has a harder time catcing up/getting promoted, the best thing for someone to do  at the 16-30 range is get a job or couple of jobs and/or go to school to get a skill or trade.


It doesnt really get any better to just live a honest life and take care of your familes and friends


People that can talk bad openly about the young generation cleary hasnt met anyone real that is from the young generation.

Jan 8, 2012 6:23PM
This is the same generation that is still living at home with mom/dad; little of course they have more to save.  And we (their parents) have educated them that this is  a necessity.  like every other generation, we all wanted to do better and provide more for our children...but i think we have created a generation of people who dont know what it's like to work for something.  sad.
Jan 8, 2012 12:40PM
I am 52 and have a military pension,will have a union pension when I turn 55, a 401K an aunuity,I hope social security, My house and truck are paid for,and 1 gen Y in My house playing video games,add that to your statistics.
Jan 8, 2012 10:56PM
maybe just maybe it is because they are living off their parents. I know of several such situations
Jan 8, 2012 10:45PM
Sure.  Lets hope they get to keep it.  The Boomers saved.....and have been the generation that was sold out since the 60's, pensions ripped off, corporations shipped out, extreme taxation, paid the greatest generations SS, Medicare and Retirement pensions.  Then took care of their parents, their kids and their grandkids.  The Boomer generation paid more into Social Security and Medicare than any previous generations.  And the previous generation reaped the rewards and exhausted the system......many paid O into the system or very little and benefited.  Good Luck generation Y good luck.....
Jan 9, 2012 12:02AM

You took the words right out of my mouth, pablacita.


Add to that the fact their parents, and grandparents, had it quite a bit tougher than they did. Most people, in the babyboomer class, had to pay for their own education; and many of the Gen Y group have parents to thank for that. And as slow train said, it's a bit hard to hang onto that investment in the future when you're being sold down the river.


At least a few people here have their eyes wide open.

Jan 9, 2012 3:49AM
thats because frankly we boomers have been spending it on our spoiled entitled gen Y kids, and they, in turn keep their money for themselves, Mine always repsonded, "I don't wanna spend MY money", but have never had issues, in fact actually had epectations of mine going to them. If you look at the political climate you see this on a broader scale. Everyone else should pay their way, their school loans, etc etc etc etc.....  Gen Y is disapointing to say the least. But that is our fault. It should be Gen ME.
I agree with some others here on this old article, and any Boomers here who are complaining about the Yer under their roof--it's your own damn fault for not making them grow up. Boomers are still giving their Yers the basics so Yers can save their money. Before I left my company, I did financial planning for some boomers who actually wanted to open up a retirement account for their 20-somethings. It was more than just one or two... When I looked at their own finances, it amazed me that they were more concerned about their children being set for life than maintaining their quality of life in their own retirement. I had to talk them out of the idea and explain to them about the elusive nature of pensions and social security and almost beat them over the heads to start them thinking about themselves. What the hell happened to the late-generation boomers? Why do they feel obligated to pay for their adult children's cars, insurance, health costs, even rent/mortgage? In some cases, the "kids" in question were even married! No way! If you're old enough to get married, you're old enough to pay your own bills.  
Jan 9, 2012 1:21AM
Maybe because in our youth we were told that we could grow our  net worth through expansion of holdings out side the stock market and the tax breaks were not there for us tat war afforded today's young people. i applaud the Gen  Y of taking matter into their own hands! Keep it up!
Jan 9, 2012 12:08AM

Many of the so called "boomers" only made enough money to pay the bills - nothing left over for savings or investments.


And if - Gen Y is putting away money for retirement - it is only those who actually can get those jobs paying enough to do so.  Those who are out of work are certainly not saving anything.


Anyone wonder - if the guys who did the survey know that a huge majority of Americans are working at low wage service jobs - They certainly are NOT saving anything.


Many don't buy into this articles survey results.

Jan 9, 2012 2:59AM

Congrats to gen Y but the numbers are still way too small.

Feb 24, 2012 12:44PM
Boomers spent their money on divorces and drugs and their McMansions and Hummers, decided to get FAT and do nothing about except take insulin or statins or some other pill instead of putting down the fork. God forbid.  The most selfish generation in our entire history.  I'm only glad that I got to see them go broke before they die, instead of the next generations supporting them and their profligate lifestyle.  See you at the buffet, Boomers.  
Jan 8, 2012 6:07PM



They can save more because they make so much more.  A top Chemical Engineering graduate in 1962 was offered a salary of $6000/year...about 12 years later, lesser qualified engineers earned $60,000 to $75,000 per year.  It is tough on those of us who are Seniors on fixed income, Social Security, and Pensions, even with late retirements.  We had a dual career marriage, progressive growth at work, two daughters unique and talented, raised right, and put through fine universities, but we struggle even with savings habits akin to our parents of the "greatest generation."Smile  Inflation has increased, the Federal Government's formula for inflation is far from correct, and the Obama offered Social Security increase almost became a deficit because of the new add-ins.  We need a fair balanced accross the board President Bush recognized.  Let's hope the 2012 election brings us a good, and new Presidential Team, and Congress...who can restore America for Americans!

Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


Smart Spending brings you the best money-saving tips from MSN Money and the rest of the Web. Join the conversation on Facebook and follow us on Twitter.