'Not Much Financial Education' — Yet Millennials Have Boomers and Gen X Beat When It Comes to Retirement Savings. Here's Why. Millennials might own fewer homes and make less money — but they're on track for a better retirement.

By Amanda Breen

Key Takeaways

  • Older millennials will be able to replace more of their income in retirement than Gen X and baby boomers.
  • Increasing automatic enrollments in 401(k) plans contributes to earlier and more significant savings.

Millennials might be behind on homeownership and earnings rates compared to older generations, but they're ahead in another significant way.

New data from Vanguard suggests they're saving more for retirement than Gen Xers and the youngest baby boomers, The Wall Street Journal reported.

Related: Retired Couple Books 51 Back-to-Back Cruises, Sails for 2 Years

When older millennials now earning a median salary hit retirement age, they'll be able to replace 60% of their pre-retirement income with Social Security and savings from other sources like 401(k)s and individual retirement accounts, according to the data. In contrast, Gen Xers and the youngest baby boomers are on track to replace roughly half of their paychecks in retirement.

Many older millennials are in a better position for retirement thanks to an increase in default 401(k) plans, as automatic enrollments contribute to earlier and more significant savings — money baby boomers and Gen X employees who waited to enroll missed out on, per the research.

And it's a good thing, too: Millennials have far less retirement security than their parents or grandparents due to a combination of social security solvency concerns and the widespread replacement of pension plans with defined-contribution plans like 401(k)s, factoring investment decisions into retirement income, USA Today reported.

Related: How to Retire Early With These 10 Money-Saving Tips | Entrepreneur

"There's not that much financial education in college, which is why automatic enrollment is helpful," 34-year-old Kenneth Adams, who was automatically enrolled in a 401(k) when he graduated from college in 2012 and started working as an engineer at a tech company, told the WSJ. "It gives you a default savings option until you educate yourself on what the 401(k) can do for you."

Amanda Breen

Entrepreneur Staff

Features Writer

Amanda Breen is a features writer at Entrepreneur.com. She is a graduate of Barnard College and received an MFA in writing at Columbia University, where she was a news fellow for the School of the Arts.

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