Important points
- Fidelity projects that the typical 401(k) balance for Millennials, aged 29 to 44 in 2024, will be around $67,300, with a contribution rate of 8.7%, which is the second lowest among generations.
- Transamerica Retirement Research Center’s findings suggest that the median retirement savings for Millennials is even lower, at $65,000, indicating that half of them have saved less.
- A noteworthy number of Millennial savers have increased their retirement contributions in 2024.
Fidelity Investments indicates that Millennials generally have about $67,300 set aside for retirement. While this looks modest next to the $192,300 for Gen X and $249,300 for Boomers, it’s worth noting that the latter groups have had longer to save.
A different picture emerges when you consider contribution rates, which include employer contributions. Millennials contribute approximately 13.3%, getting closer to the 15% that many financial advisors recommend. Interestingly, nearly 40% of savers have raised their contributions in the past year. This generation, shaped by economic challenges, is seeing a bit of positive movement, but the question remains: will it be enough to navigate potential economic uncertainties?
What you can and cannot know from the average balance
The average savings doesn’t tell the whole story. In 2025, Millennials will fall between 29 and 44 years old, meaning some are just starting their careers and others are nearing middle age. Contrary to the average, Vanguard’s data for 2024 shows that those aged 25 to 34 contribute about $42,640 to retirement plans, while the 35 to 44 age group contributes around $103,552.
When looking at medians, they provide a clearer view by being less influenced by the high balances held by the wealthy. Vanguard reports a median amount of just $39,958 for 35- to 44-year-olds, suggesting that a few high balances skew the average. According to Transamerica statistics focusing on the U.S. middle class, Millennials’ median retirement savings sit at $65,000. That means half have saved less than that amount.
Why so many Millennials are playing catch-up
If you’re feeling a bit behind when looking at these numbers, it’s essential to understand the economic environment hasn’t always favored Millennials. The oldest members of this generation entered the workforce around 2003 but faced the Great Recession shortly thereafter. During that crisis, over 15% lost their jobs, and for many who stayed employed, wages remained stagnant for years.
Then, there’s the student debt issue, which peaked around the same time Millennials reached adulthood. Approximately 40% of this generation carries student loans, and many have prioritized paying these off instead of focusing on retirement savings. The pandemic added another layer of disruption. While some Millennials accessed their 401(k)s during unemployment, others simply halted their contributions.
How can we close the gap?
Even if you’re lagging in retirement savings, there’s still a chance to catch up. It’s not just about saving money; think about smarter saving strategies too. For instance, around 18.3% of Millennials use a Roth 401(k), which allows for tax-free withdrawals in retirement, particularly beneficial for those expecting to be in a higher tax bracket later on.
Fidelity suggests aiming to save three times your annual income by age 40. If you’re behind, even a 1% increase in your savings rate each year can lead to significant differences over time—especially if retirement is still a couple of decades away.
Tips
Employer matching can provide an immediate boost to your savings, offering returns of 50% to 100% depending on the employer. This is certainly more immediate than what the market might promise. Be sure to check your plan so you don’t miss out on free money you might otherwise leave behind.
Conclusion
For Millennials with lower retirement savings, it’s crucial to remember that you’re not alone. The context of your situation is important; you belong to a generation that started working during a recession, took on significant student debt, and faced additional challenges during the pandemic.
You can still make strides by maximizing employer matches, gradually raising your contributions, and allowing compound interest to do its thing. Many in your generation might feel like they started late, but with 20 to 35 years until retirement, there’s still plenty of opportunity to build those savings.
