Understanding How Your Clients Think About Retirement is Key


56% of American workers across all ages cite saving for retirement as a financial priority, but depending on their age, the data suggests they may be approaching that milestone very differently.1 Segmenting by generation can be a powerful way to address your clients’ needs. Understanding how each generation is thinking about retirement today, gives you an opportunity to better customize how you work with your clients tomorrow.

In 2022, Envestnet commissioned a national research study with The Center for Generational Kinetics to better understand how different generations think about their finances and financial services in general. Those findings, along with other national research findings, can provide powerful insights into each generation’s unique perspective.

Younger generations are already thinking about retirement

Despite their age, Generation Z workers (born 1997-2012) and Millennials (born 1981 to 1996) care about their ability to retire in the future. 67% of Gen Z workers are saving through 401(k)s or similar retirement plans, and started saving around the unprecedented young age of 19. Those participating in a 401(k) or similar plan contribute 20% of their annual pay, on average. Similarly, even more Millennial workers (76%) are saving for retirement in a 401(k) or comparable plan, and began saving around the age of 25. Millennials participating in a 401(k) or similar plan contribute 15% of their annual pay, on average.1

Despite starting early, both generations are still working hard to build adequate savings. Gen Z workers have saved $33,000 (estimated median) in total household retirement accounts, but only $2,000 in emergency savings. Millennial workers have saved $50,000 (estimated median) in total household retirement accounts and $3,000 in emergency savings.1 These younger generations may be thinking of their long-term finances over their short-term finances.

Unlike the older generations, it is important to remember that Social Security may not be there for these groups when they are ready to retire. About half, or 52%, of Millennial workers expect their primary source of retirement income to be self-funded savings, including 401(k)s, 403(b)s, and IRAs or other savings and investments.1

Particularly for Gen Z, younger generations are accessing financial knowledge online. A 2021 Credit Karma study found that 56% of Gen Z and Millennials report they intentionally seek out financial advice online or through social media. Additionally, 51% of Gen Z respondents admit to having taken financial advice from someone they didn’t know online.2

As one might imagine, older generations have some different habits.

Older generations are concerned about retirement

Roughly 28%, or less than one third, of Generation X workers (born 1965 to 1980) “strongly agree” they are building a large enough retirement nest egg, even though 81% of those surveyed are saving for retirement in an employee sponsored 401(k) or similar plan outside the workplace. Most Gen X workers began saving for retirement around age 30, significantly later than their Millennial and Gen Z coworkers.1

Gen X workers participating in a 401(k) or similar plan contribute around 10% of their annual pay. They have saved an estimated median of $87,000 (in total household retirement accounts and $5,000 in emergency savings.1

At the same time, Baby Boomers (born 1946 to 1964) have had a very different experience from other generations. Many were already midcareer when 401(k)s and similar plans became available, rather than traditional defined benefit pension plans. Unlike other generations, 40% of Baby Boomers expect social security to be a primary source of income in retirement. 80% are now saving for retirement in an employer sponsored 401(k), or another similar plan, if they aren’t already retired. They have saved an estimated median of $162,000 in total household retirement accounts, and $15,000 in emergency savings.1

Of note, almost half of Baby Boomers in the workforce, or 49%, expect to have to work past age 70 or do not plan to retire.1 Regardless of why they are making those plans, some believe there is a chance that retirement may be their only option as the new generations start trickling into the more seasoned roles. Nearly 75% of the American workforce will be under 55 years old by 2024, according to the U.S. Bureau of Labor Statistics. Gen X workers are watching this play out and it is estimated that approximately a third currently expect to retire at 70 or older, or do not plan to retire.

The opportunity for financial advisors

As a trusted financial advisor, you are uniquely positioned to help your clients prepare for retirement. Research conducted by the The Center for Generational Kinetics and Envestnet tells us that when it comes to retirement planning, specifically, a majority of people consider financial professionals or advisors to be their most trusted source of help. That means the average person would rather turn to you to ensure they are adequately prepared for retirement, than turn to family and friends, online sources, financial websites, or other brokerage websites or tools.

The demand for retirement planning is there, clients already want to work with you. Even the younger generations who are more likely to turn to online sources are eager for information. Of course, that opportunity will be lost if clients’ needs aren’t met. Because each generation has slightly different needs and ways of thinking about retirement, you’ll need to address each generation in a slightly different manner.

There are a variety of ways you could do this at scale. Generally speaking, the first step is to segment your book of business. Then when you connect with each segment, customize that interaction to address their unique needs. Examples might include:

  • Targeted emails delivering valuable information on timely topics relevant to that specific generation
  • Exclusive, small group lunch-and-learn events on topics like estate planning or tax optimization, customized for clients at a specific stage of retirement planning

You may also benefit from leveraging collaborative online tools, such as:

  • Interactive financial planning tools that clients may access from home to make complex financial topics easy to understand, great for younger generations who are eager to learn and already looking for online options
  • Interactive estate planning tools that demonstrate advanced planning strategies, address client cash flow questions prior to retirement, and model dynamic net worth over time, which may be a good option for Gen X clients looking to feel secure in their plans for the future

For additional perspective, join us for a webinar on April 12th – “Rewirement: Rewiring The Way You Think About Retirement” – where Jamie Hopkins of Carson Group and the FIDx team will address misconceptions that prevent clients from building successful retirement plans, as well as strategies for addressing those assumptions. This is a Continuing Education (CE) webinar. Live attendees will be eligible for CFP and The American College CE credit. Register here.

At the end of the day, meeting each generation where they are in their retirement journey may help you to deepen and grow your client relationships, while also enabling your clients to live an Intelligent Financial Life.

1. 22nd Annual Transamerica Retirement Survey of Workers, October 2022, https://transamericainstitute.org/docs/default-source/research/emerging-from-the-covid-19-pandemic—four-generations-prepare-for-retirement-report.pdf
2. Credit Karma press release, July 31, 2021, https://www.creditkarma.com/about/commentary/gen-z-turns-to-tiktok-and-instagram-for-financial-advice-and-actually-takes-it-study-finds
3. The Center for Generational Kinectics and Envestnet National Research Study Findings, January 2022


The information, analysis and opinions expressed herein are for informational purposes only and do not necessarily reflect the views of Envestnet. These views reflect the judgment of the author as of the date of writing and are subject to change at any time without notice. Nothing contained in this piece is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type.

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