Americans are getting creative with their retirement savings. It’s not just about maxing out that 401(k) anymore.
While workplace retirement plans remain the backbone of many people’s nest eggs, each generation has developed its own playbook for building wealth beyond workplace retirement plans.
According to Charles Schwab’s latest annual survey of 401(k) plan participants, the ways people stash away money for their golden years can vary dramatically depending on when they were born.
How each generation is saving for retirement outside of 401(k)s
The most popular non-401(k) retirement strategy cuts across all age groups: Savings account investments. More than 60% of every generation relies on this straightforward approach.
Generational divides emerge with more specialized investment vehicles, especially individual retirement accounts (IRAs) and brokerage accounts. Here’s the breakdown for each generation:
Generation Z:
- Savings account: 69% of respondents from this generation save for retirement in this type of account
- IRA: 21%
- Brokerage account: 14%
- Health savings account: 17%
Millennials:
- Savings account: 62%
- IRA: 36%
- Brokerage account: 21%
- Health savings account: 28%
Generation X:
- Savings account: 66%
- Individual retirement account: 45%
- Brokerage account: 29%
- Health savings account: 28%
Baby boomers:
- Savings account: 66%
- Individual retirement account: 53%
- Brokerage account: 41%
- Health savings account: 23%
The survey reveals a dedication to retirement savings even as inflation remains the top obstacle for workers. Only 11% say they have reduced their 401(k) contributions due to economic conditions.
Building your multi-account strategy
The Charles Schwab survey makes one thing clear: Successful retirement planning requires thinking beyond your 401(k). While these workplace plans remain crucial — 74% of respondents would not take a job without one — they are just one piece of the puzzle.
Workers estimate needing $1.6 million for retirement, on average. With them expecting that their 401(k)s will provide 45% of their retirement income and Social Security will provide only 18%, the math demands additional savings vehicles to bridge the gap.
Your ideal mix of retirement accounts depends on your age, income and goals. The key is not mimicking what other generations do but understanding all your options and creating a diversified approach that evolves with your life.
If you find this intimidating, consider working with a financial advisor. Among Charles Scwab survey respondents, 29% reported that they currently receive financial advice from such a professional.
Because when inflation threatens to erode your purchasing power and Social Security’s future remains uncertain, betting everything on a single savings strategy could leave you scrambling when it is finally time to retire.
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