Personal Finance

Are Gen Z & Millennials Losing the Retirement Game? Here’s Why Baby Boomers Have It So Good

Joey Frenette

Published: November 3, 2024 11:46 am

In many ways, a typical Baby Boomer-style retirement seems a tad out of reach for today’s younger generations. Undoubtedly, Gen Z and Millennials look to have been dealt a much tougher hand, with COVID-19 pandemic setbacks and one of the nastiest periods of inflation in decades.

With a potential “lost decade” for stocks that may loom and the potential for artificial intelligence (AI) to disrupt the labor market, the path forward probably won’t be getting any easier as Gen Z and Millennials look to build up their nest eggs after dodging and weaving past constant economic setbacks thrown their way.

In any case, I think Gen Z and Millennials have demonstrated a high degree of perseverance through economic hailstorms. And even if the winds don’t blow their way in the decades leading to their retirement, as they have for Baby Boomers, they can (and I believe many of them likely will) find a path forward that helps them make up for lost time as they strive to “win” the retirement game.

Key Points About This Article

• Just because times have been tough and the future doesn’t appear as bright does not mean Gen Z and Millennials are “losing” in retirement.
• Today’s young people still have time on their side. And they can pull ahead en route to a nice retirement.
• Also: Take this quiz to see if you’re on track to retire ^(Sponsored)

Are Gen Z and Millennials losing the retirement game?

Even for those who believe Gen Z and Millennials are “losing the retirement game,” I would argue that it makes no sense to make such a call, especially since the game is not even close to being over yet.

Arguably, we’re in the third or fourth innings of a ballgame with a rather tight score. And though the Baby Boomer’s path to retirement may be enviable (and perhaps a whole lot smoother), I’d argue that the tougher road taken can still get one to their destination on time or even ahead of time!

Any way you look at it, time is still very much on the side of Gen Z and Millennials. So, if they make the right moves today (reaching out to a financial adviser, saving, and investing wisely in low-cost index funds), they not only have a shot at “winning” the retirement game but perhaps winning in style.

In a prior piece, I noted the likelihood that the Baby Boomer generation had hit the retirement jackpot (thanks in part to solid stock gains in recent years) and that younger generations would need to go the extra mile to achieve their form of comfortable retirement.

The last decade of stock gains has been the cherry on top of the sundae for retiring Baby Boomers entering retirement.

Indeed, it’s pretty discouraging for a young, new investor to hear an established financial heavyweight like Goldman Sachs (NYSE:GS) call for a “lost decade” for stock returns.

Sure, the stock market has delivered some pretty extraordinary returns in the last decade that may be tough to top in the decade ahead. For the Boomers, the last 10 years may just have been enough of a boost to help them put the finishing touches on their nest egg.

Though there’s no way to tell for sure if the next 10 years will return low single-digit percentage points (an average of 3% per year from stocks for the next decade, according to Goldman), there’s no question that extended periods of stock market outperformance may very well stand to take away from future performance. Take more cookies out of the jar on day one, and you’ll have less to enjoy for the rest of the week.

However, Gen Z and Millennials shouldn’t be too down on the possibility (or likelihood, according to some big-name pundits) of modest returns from here. After all, we’ve heard calls of low returns moving forward before. And some such market calls have completely missed the mark. Just look up past predictions from various pundits calling for “lost years” or “decades” of returns, and you’ll see that a handful of them do not hit the spot.

As such, the best thing younger investors can do is stay invested and not take drastic action (let’s say overreaching on the risk front for greater returns) in response to short-, medium- or long-term market predictions that I believe have a realistic chance of being incorrect.

The bottom line

Finally, Gen Z and Millennials need to stop comparing themselves to the Baby Boomers and how they had (or have) it. Being envious of a good hand dealt will do you no good. Instead, one should focus on doing their best to move ahead despite more challenging circumstances. After all, it’s arguable that tackling challenges and coming out on top despite setbacks and difficulties can be even more rewarding!

Further, just because a Millennial’s Baby Boomer parents have it so good in retirement does not mean they are “losing” the retirement game.

The game isn’t over, and it’s still “winnable.” Of course, it largely depends on how Gen Z or Millennials define “winning” the retirement game. For many, winning doesn’t entail achieving a retirement that’s as good as their parents.