Navigating Retirement: A Generational Blueprint for Financial Security
Understanding Your Retirement Savings Position
It's natural to assess your retirement preparations against your peers to gauge your financial standing and progress towards a comfortable post-work life. While overall retirement fund totals offer a snapshot, understanding how different age groups allocate their current earnings to long-term savings can provide valuable insights, especially if retirement is still a distant goal.
Maximizing Retirement Contributions: Strategies and Limits
Establishing automated contributions to retirement accounts is a smart move. This strategy leverages the power of compound interest, facilitates a dollar-cost averaging approach to market investments, and helps maximize potential employer matching contributions. It's crucial to remember the annual contribution limits set by the IRS, which for 2025 are $23,500 for most 401(k) plans and $7,000 for individual retirement accounts (IRAs).
Generational Contributions to 401(k)s: A Detailed Look
Data from Fidelity, covering nearly 25 million retirement plan participants, reveals significant trends in 401(k) contributions across generations as of the end of 2024. The average employee contribution was generally sufficient to qualify for most employer match programs.
Contribution Rates Across Generations
Baby Boomers led the way, contributing an average of 11.9% of their income to 401(k)s. Gen X followed with 10.2%, Millennials with 8.7%, and Gen Z with 7.2%. It's worth noting that extreme high or low contributions can skew these average figures.
Employer Contributions to 401(k)s
Employer contributions were also robust, with both Baby Boomers and Gen X receiving an average of 5.0% of their income as employer contributions. Millennials received 4.6%, while Gen Z received 3.7%.
401(k) Account Balances by Generation
Predictably, generations with more time in the workforce and longer periods of compounding returns have higher average 401(k) balances. Baby Boomers had the highest average at $249,300, closely followed by Gen X at $192,300. Millennials' balances were considerably lower at $67,300, and Gen Z, many of whom are just beginning their careers, had an average of $13,500.
Beyond 401(k)s: Diversifying Retirement Savings
Retirement savings are currently experiencing a surge, with nearly 40% of savers increasing their contribution rates by an average of 2.9% in 2024.
Roth 401(k) Adoption Across Age Groups
Many individuals are opting for Roth 401(k)s over traditional plans. Specifically, 12.2% of Baby Boomers, 14.5% of Gen X, 18.3% of Millennials, and 18.2% of Gen Z retirement savers contribute to Roth 401(k)s.
IRA Contributions and Balances
Individual Retirement Accounts (IRAs) are another popular choice for retirement savers. While Fidelity's data doesn't provide a generational breakdown for IRA contributions, the average IRA contribution remained steady at $2,200 from Q2 2024 to Q2 2025. However, the average IRA balance saw an increase, rising from $125,200 to $131,400 during the same period. Notably, older savers significantly boosted their IRA contributions, with Baby Boomers increasing theirs by 37% and Gen X by 25% in the last year.
Overall IRA Balances by Generation
Similar to 401(k) trends, IRA balances also reflect the impact of time and consistent contributions. As of late 2024, Baby Boomers held an average of $257,002 in their IRAs, followed by Gen X with $103,952. Millennials had a much lower average of $25,109, and Gen Z's average IRA balance stood at $6,672.