Retirement readiness varies across generations

Vanguard's 2025 Retirement Outlook found fewer than half of Americans (42%) are on track for retirement, with Gen Z (47%) and millennials (42%) more likely to be prepared than baby boomers and Gen X (about 40%); median-income baby boomers face a projected replacement rate near 56% and an estimated $9,000 annual shortfall.

Vanguard's 2025 Retirement Outlook reports that overall retirement readiness is low and that a generational divide has emerged. Fewer than half of Americans (42%) are estimated to be on track for retirement. Younger cohorts — Gen Z and millennials — have higher reported readiness rates than baby boomers and Generation X. For median-income baby boomers (about $56,000), projected retirement savings would replace roughly 56% of pre-retirement income, leaving an estimated $9,000 annual shortfall. Key findings: - Vanguard's 2025 outlook estimates about 42% of Americans are on track for retirement. - Gen Z is reported at 47% and millennials at 42% on track, while baby boomers and Gen X are near 40%. - Median-income baby boomers face a projected replacement rate near 56%, with an estimated $9,000 annual gap. - Researchers note many baby boomers entered the workforce before widespread adoption of modern defined contribution plan features tied to changes after the Pension Protection Act of 2006. - Financial planners quoted in the article observed that limited time to make up shortfalls and the presence of high-interest consumer debt are complicating factors for late savers. Summary: The generational gap described in the report means a notable share of baby boomers may have lower retirement income relative to pre-retirement earnings and less time to recover from under-saving. Experts cited structural changes in retirement plans and rising consumer debt as contributing factors, and the path forward for many individuals is undetermined at this time.