Just how prepared is each generation in America to have enough savings for retirement, exactly?
Recently, the experts at Vanguard took a close look at that, in the Vanguard Retirement Outlook. This research broke down exactly how retirement-ready the American workforce is, on a generational basis.
Vanguard’s findings brought about some extremely interesting results. Notably, over four in 10 Americans are actually on track to maintain their lifestyle in retirement. Furthermore, Americans have saved well over $43 trillion for retirement expenses, as of March 2025. Back in March 2005, Americans only had about $14 trillion saved up for retirement.
As one would likely expect, the extent of American workers with strong retirement security has some significant variance depending on the generation. However, the generation that Vanguard found to be the most retirement ready may come as a surprise.
Gen Z Leads the Way
Vanguard’s report found that about 47% of Generation Z workers are projected to be ready for retirement when the time comes. Meanwhile, 42% of millennial workers and 41% of Generation X workers are expected to be ready for retirement. Lastly, only 40% of baby boomers are expected to be fully prepared for retirement.
Gen Z being the top respondent would likely come as a shock to some advisors. After all, this generation does have to deal with a greater burden of student debt than older generations likely had at similar ages. However, the Vanguard team notes that one crucial factor is working immensely in Gen Z’s favor: expanded access to Defined Contribution (DC) Plans.
Vanguard’s report notes that the extent of workers who have access to DC Plans has expanded significantly over the years. While only 35% of workers had access to DC Plans in 1989, 52% of workers did so by 2022. This broadening retirement plan access helps make it easier for the younger generations to begin saving for retirement early, even as they grapple with personal debt and a lack of disposable income.
"Expanding access to defined-contribution plans and improving plan design has dramatically improved retirement outcomes," added Fiona Greig, Ph.D., global head of investor research and policy, and co-author of the report. "Our research shows that features like autoenrollment and higher default saving rates are helping more Americans build retirement wealth."
How Baby Boomers Fell Behind
However, the question remains: What’s going on with baby boomers? Well, the Vanguard report finds that retirement readiness for baby boomers does significantly vary based on income level.
With the exception of the top 30% of income earners, baby boomer workers are expected to fall short of their necessary retirement savings by about 20%, according to Vanguard. Vanguard notes that Social Security income only accounts for about 40-60% of pre-retirement income for low- to middle-income baby boomers.
As for other solutions, the Vanguard report does note that some retirees do opt to sell their houses. Given that we are currently in a buyer-favored market, this can make a lot of sense for folks looking to bolster their savings. However, as Vanguard points out, this isn’t exactly a foolproof strategy.
Retirees who are selling their old home and are looking for a new one could be in for a shock when they see how high mortgage rates have gotten these days. Higher rates can easily cut into much of the cash that a seller was hoping to use for long-term savings. As such, Vanguard notes that selling a home and then becoming a renter elsewhere could serve as an ideal middle ground option.
Building a Better System
While conditions may have improved, the retirement savings system still has a ways to go. DC Plans are certainly making retirement savings more possible for workers, but expanding access and continuous improvement remains paramount. Furthermore, Social Security benefits need to be reinforced in order to ensure low- and middle-income Americans can retire comfortably.
"Retirement readiness isn't just about saving—it's about having the right tools, support, and access throughout a worker's career," noted Kelly Hahn, Vanguard's head of retirement research, and co-author of the report. "Retirement security is a shared responsibility. Policymakers, employers, and individuals all have a role to play in building a more resilient future."
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